One thing is certain, the Dollar is not being sold off aggressively as many have expected. Four rounds of massive quantitative easing and zero interest rates have done little to dampen the appetite for what firmly remains the world’s reserve currency.
The Dollar has been putting in a number of powerful surging days right at the point in the Cycle where you would normally expect a defining drop. This occurred on January 3rd/4th and again a similar surge this past Friday. The Jan 3rd surge forced a short 11 Day Cycle and this Friday’s move has the trappings of yet another new Cycle in play.
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What we’re seeing with these surges is reluctance by the Dollar to collapse into a 3 Year Cycle Low. If we look at the Investor Cycle chart below we notice that we have yet to see a single IC Failure. Until we see price move below a previous ICL (Cycle Fail), then we can’t rule out the possibility of this being just one giant pause in a cyclical bull move.
The ultimate “line in the sky” remains the 81.50 level, the line that marked the Week 9 high. Until that is taken out, I will favor the massive Head & Shoulders pattern that is still evident from the chart below. Although the Dollar is holding up well here, we’re not seeing the type of strength yet that suggests this outlook is incorrect. Once that 78.60 line gives way then nothing will stand in the Dollars way towards an ICL.
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This as is an excerpt from this weekend’s premium update published on Saturday (1.19) focusing on the US Dollar from the The Financial Tap, which is dedicated to helping people learn to grow into successful investors by providing cycle research on multiple markets delivered twice weekly, as well as real time trade alerts to profit from market inefficiencies.
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