I want to make you aware of a possible major breakdown in the US dollar index and provide you with my
gold forecast.
If this scenario plays out then we will see the Euro explode to the
upside and also see commodity based currencies like the Canadian dollar,
and Aussie dollar rally. This would also be bullish for commodities in
general like gold, silver, precious metals mining stocks etc…
The US dollar index chart below clearly shows a three year topping
pattern with multiple price levels which when broken will trigger
farther selling. These red horizontal lines on the chart show these
price levels.
Critical support is around the 79.50 area which if breached should
start a major wave of selling in the next few months. The initial wave
of selling should take price all the way down to the 78.00 level before
taking its first breather/pause.
*Trade Tip*
Most technical analysis books and traders think that the more times a
support trend line has been touched the strong it becomes. That actually
could not be any further from the truth.
Let me tell you how to trade trendlines.
1. You must have at least two pivot points (highs or lows) to be able to draw a trendline.
2. The 3
rd and 4
th touch of this line can be traded for a bounce.
3. Any touch of the trendline after the 4
th is actually doing damage as it eats up the support volume.
4. A rising trendline like the one below clearly
shows multiple pivot lows that when breached will trigger stops and
flood the market with supply/sellers. It’s the perfect storm for a
downward move.
Gold Forecast
My gold forecast has not changed in nearly a year as we wait for the
gold market to bottom, then prove it’s self by breaking out of its
basing pattern.
The bullish
gold forecast is of the bigger picture. Most
gold market traders
and investors are caught up with the day to day price action and are
growing tired of the range bound trading which gold has been doing for
some time now.
In 2011 I pointed out the possible major topping pattern in gold, and
that if price broke to new lows, then it would be lights out for at
least a year if not two before the chart would build a new bullish base.
And that leads us to my current
gold forecast.
Gold Forecast & Gold Market Traders Conclusion:
In short, my
gold forecast should be looked at from the big
picture perspective. Getting involved in any gold stock, commodity or
investment that is stuck in a range does carry more risk. It is easy to
get shaken out of these positions a few times before the new bull market
emerges.
The lowest risk position is to wait for the breakout of the basing pattern (yellow rectangle), only then can
gold market traders get heavily involved to the long side.
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We spoke with Martin Armstrong
today about the Blood Moon, the Death of the Dollar, the crumbling
Euro, and the ascent of China. While Martin sees China becoming the
leading world economy eventually, he doesn’t see the dollar dying off as
quickly as others do. He says that this is because there is no other
currency to take its place at the present time. The war cycle is heating
up at the same time as the civil unrest cycle… the first time this has
happened since the 1700′s. Also the first of four Blood Moons has just
passed, while the last will pass just as the Sovereign Debt Big Bang goes off in the third quarter of 2015. Interesting times ahead, that is for sure.
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