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The Dollar has Achieved Liftoff


The dollar has achieved liftoff while the politically correct analysis denied it would ever happen

Terry Kinder precious metals analysisBullion.Directory precious metals analysis 2 March, 2015
By Terry Kinder

Investor, Technical Analyst

Political correctness in analysis spells the death of objectivity and truth. For years the analysis of the U.S. Dollar has been that it is trash and is going to burn. Well, at a certain point that is likely to be true. However, it ignores the fact that while so many have been dancing prematurely on the grave of the dollar, it has managed once again to move higher. The same commentators that were confident that an increased money supply would have led to hyperinflation by now were writing the dollar’s obituary. Apparently, the dollar wasn’t listening.

One of my beefs with what is called fundamental analysis is that it is rare that you can find two analysts or commentators who agree on a full set of fundamentals. What are they? What fundamentally determines whether the dollar moves higher or lower? Does an increasing quantity of money inevitably lead to inflation? How long does the process take? How much of an increase over what period of time will lead to what percentage of inflation? If you can’t quantify it or represent it numerically, mathematically, etc., then you are merely guessing. It’s as simple as that.

For the above reasons, and more, I prefer price analysis. Simply put, the price contains all of the relevant information from thousands, even millions of people regarding what the price of the dollar should be. All fundamentally important information is embedded in the price, allowing the price analyst to create charts focusing on price and price alone. Utilizing price charts, the analyst can begin to see pattens, areas of price support and resistance, etc. that help predict the future price of the dollar. While these predictions aren’t 100% accurate, they do decrease bias substantially. Over time, these techniques can be refined and more and more accurate analysis of price can result.

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I will now step off of my soapbox so we can take a look at two charts that quite clearly indicate that the dollar, despite dire predictions to the contrary, has achieve liftoff and will advance significantly higher over the next several years.

Dollar Monthly Pitchfan

Having broke above previous Pitchfan support, the next long-term target for the dollar is above $140.00

Having broke above previous Pitchfan support, the next long-term target for the dollar is above $140.00

The dollar broke above the long-term price trend line back in November of 2014. By January of this year it was knocking at the door of the Pitchfan resistance level that was near $92.00. Currently the dollar is above $95.00 and there is not much chart resistance between it and much higher levels. Of course, it will take time for the dollar to move to some of the levels we will discuss, but it appears highly probable that much higher dollar prices will be achieved in the future. On the Pitchfan chart the next target is above the $140.00 mark. Had you asked me a few years ago, I wouldn’t have believed it was possible. But, that was back when I still was using primarily fundamental analysis, which resulted in much less accurate forecasts.

Dollar Monthly Phi Cirles, Fib Spirals

Once the dollar price bounced off of the large Phi Circle, it has been up, up, up from there

Once the dollar price bounced off of the large Phi Circle, it has been up, up, up from there

The monthly chart of Phi Circles and Fib Spirals reveals that the dollar had a strong bounce upon hitting the bottom of the last large Phi Circle. This is not totally unexpected. The strong bounce, also located quite near a Fib Spiral, only reinforces the idea that the dollar’s upward momentum is likely to be sustained.

There are two important resistance levels – near $130.00 and above or near $140.00, it just depends on where the dollar price challenges these resistance levels.

Martin Armstrong has discussed the dollar extensively, and made a good case for why weakness in the Eurozone will push the U.S. Dollar higher. Once the move is complete, we may finally see a situation where the dollar sinks to much lower levels. At that point, perhaps, it may be possible that some replacement for the dollar will be sought by the international community. However, until this dollar run is complete, we shouldn’t be expecting the dollar to be unseated just yet. These type of dollar bull markets can be sustained for a number of years, so while the bull continues, it is a pretty risky play to bet against it.

You can’t hope to achieve accurate analysis saying only what people want to hear. We have to move beyond politically correct thinking and trying to please your perceived audience. Only through shunning political correctness can we hope to move past what fundamental analysis says should happen and begin to look with fresh eyes at what is actually occurring.

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