Tuesday, March 15, 2011

US Dollar on the Verge of Failure

This is a weekly chart of the U.S. Dollar Index (DXYO) dating back to 2002. With horizontal lines I have identified the support breaks that lead to the conclusion of each of gold's past 5 C waves (identified with a green arrow and its date). 
A couple of these breaks sent the dollar lower for 4 weeks, a couple sent the dollar lower for 6 weeks, and one for about 8 weeks.
Click on the chart to ENLARGE
Today we find the US Dollar on the precipice of another support break that I expect will propel gold to the conclusion of the current C wave.
The dollar has been declining steadily for the past 10 weeks (since January 1) despite incredible world turmoil, the Japanese situation being the most recent.  I have no doubt the trend line currently supporting the dollar will be broken soon and the conclusion of the C wave will begin.


  1. Thanks for the larger picture view, guidance is appreciated with all this whipsawing!

    A small question, you recently commented on a post advising that you would add to positions on a swing high on the dollar index. Would yesterday(14) or today's(15) action count as that happening? What price would produce a swing high?

  2. john,
    do you think what's going on in Japan will keep the dollar above water?? The flight to safety thing?? It Bothers me.

  3. Dave - the best number to focus on is 76.12 If/when the US Dollar trades below 76.12, the currently left translated bearish cycle adds to its definition a "failed" daily cycle - in that 76.12 was the low of this cycle's beginning on March 7.

    Next comes the low of the annual cycle established on Nov. 4,2010 at 75.63.

    Next comes the annual cycle low established on Nov. 27, 2009 at 74.23.

    Next comes the previous 3 year cycle low established on March 17, 2008 at 70.70

    You can see that there is a lot of room to fall if/when the panic sets in.

    Monty - the market should have been rallying the dollar all day yesterday, what with all the uncertainty of a nuclear explosion and all. Instead, the market sold the dollar all day - taking it down to the edge of the abyss. I take this to be a rather clear signal that the dollar is in deep trouble.

  4. Hi John,

    Do you and Gary (Toby?) share research? Your posts seem to have the same flavor. Both of you are talking about the last C wave up in gold. Both discussing the imminent failure of the USD.

    Just curious. Thanks for the great blog!

  5. Hi Alesund - Yes, Gary and I are partners of the GoldScents website. I have listened and learned from Gary each and every day for about the past four years and I do indeed try to present some of his ideas from my point of view and understanding.

    I generally try to grasp some of his 'big picture' concepts, research an aspect of the concept that fascinates me, and then see if I can successfully communicate that in my own way to the reader.

    Thanks for both your question and compliment.