The price action in the U.S. Dollar since the 2011 bottom continues to unfold in the same manner as experienced following the bottoms of 1980 and 1995. This is within the framework of the numerous turning points in the 16-year cycle as labeled below. The February low becomes the definitive level that needs to hold in order to keep the bullish scenario in place.
The following charts display the daily price structure. The violation of the basic support line (B to H) into point J that occurred in December is common in all three charts (). It then developed into a double bottom, successfully holding around point H (). The current rally above point I, twenty-two months after the major bottom (), should find resistance from here to the 50-week (233-day) Bollinger Band (83.55) and the July highs at 84.10.
A subsequent consolidation that gives back less than half of the rally from February 1st, allowing the RSI to drop back below the mid 50’s, could be the precursor to a longer-term breakout, targeting the dotted red resistance channel on the monthly chart around 93 (labeled point 4).
BOB HOYE, INSTITUTIONAL ADVISORS
Opinions in this report are solely those of the author. The information herein was obtained from various sources; however we do not guarantee its accuracy or completeness. This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized.
Investors should note that income from such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Neither the information nor any opinion expressed constitutes an offer to buy or sell any securities or options or futures contracts. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report. In addition, investors in securities such as ADRs, whose values are influenced by the currency of the underlying security, effectively assume currency risk. Moreover, from time to time, members of the Institutional Advisors team may be long or short positions discussed in our publications.