Dollar Primed for Collapse by End June: Charts

By: Daryl Guppy
CNBC Contributor

The dollar's recent strength has been explained by most market analysts as a result of the euro weakness rather than any fundamental support for the greenback. In fact, a closer look at the dollar's chart - particularly the dollar index - suggests the currency may be primed for a collapse.

The dramatic dollar index rise from $0.81 to $0.87 in recent weeks shows the chart's developed a dramatic and possibly dangerous parabolic trend. This trend has four important features.

CLICK TO ENLARGE GRAPH
Dollar Index Weekly Chart

The first is the way it captures an acceleration in behavior. The trend starts slowly and then gathers speed, rapidly moving up with increasing volatility.

The second feature is the shape of the curved parabolic trend rise. This is not a true parabolic curve because as the trend accelerates the curve changes shape until it becomes vertical. It’s the vertical section of the curve which is most useful because it provides a exact date when the trend will inevitably collapse.

This type of trend line curve was first identified in the 1930’s and it was mistakenly called a parabolic curve. We continue to use the name, even though it is not an accurate description. In the 1930’s this was a rare behavior. In the last decade this curve has become increasingly common as volatility has increased in modern markets. This type of trend should not be confused with the parabolic Stop and Reverse indicator.

The third feature of the parabolic trend line centers on the candles that build the pattern. Every day a new candle is added to the right of the previous days candle. Eventually, and inevitably, a candle will move to the right of the vertical section of the parabolic trend line and signal and end to the trend. The trend has a final ending date that can be calculated in advance using the vertical section of the trend line.

The fourth feature of the parabolic trend line is the high probability of a very rapid collapse in the trend. A good example is the parabolic trend in the oil market in 2008. When this trend collapsed the price dropped from $145 to $90 in 13 weeks.

The dollar index suggests the greenback will continue to stengthen until the end of June, with a target near $0.89-$0.91, before it collapses to a downside target of $0.81.

Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders –www.guppytraders.com . He is a regular guest on CNBC's Asia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe.

If you would like Daryl to chart a specific stock, commodity or currency, please write to us at ChartingAsia@cnbc.com
. We welcome all questions, comments and requests.

CNBC assumes no responsibility for any losses, damages or liability whatsoever suffered or incurred by any person, resulting from or attributable to the use of the information published on this site. User is using this information at his/her sole risk.

Views: 33

Comment

You need to be a member of 12160 Social Network to add comments!

Join 12160 Social Network

Comment by youhavetoforgiveme on May 28, 2010 at 3:12pm
So what if it does? It (paper money) never really was worth anything anyway. Example: Until the invention of superconductor technology, gold had no real value-- other than that men would (literally) kill each other to possess it's beauty.

In other words, the dollar crashes, we quickly go a back to the barter system. The universe will tolerate a paradox (paper money actually being worth something when it's not), but it abhors a vacuum (commerce coming to a utterly crashing halt). Another "economy" will present itself after (and if) the dollar crashes.

The only question now is, if the Federal Government falls, who will then be leading the show? Will they be better or worse than the SLIME before?

"Destroying the New World Order"

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

TOP CONTENT THIS WEEK

Latest Activity

James Roberts commented on Diana's video
Thumbnail

California Diseases Are SKYROCKETING, Killing Infants, It Is Devolving Into A "Third World"

"The punchline is the huge percentage of US food that's grown there."
30 minutes ago
James Roberts favorited Diana's video
33 minutes ago
James Roberts commented on Mr. Sizzle's photo
Thumbnail

A classic example for term limits in Congress.

"We have term limits. They're called elections funerals." - Mitch McConnell I hope T Rump…"
46 minutes ago
James Roberts commented on Mr. Sizzle's photo
Thumbnail

A classic example for term limits in Congress.

""We have term limits. They're called elections funerals." - Mitch McConnel"
49 minutes ago
James Roberts favorited Mr. Sizzle's photo
50 minutes ago
James Roberts posted blog posts
58 minutes ago
Boris posted a status
"Narcos took a city by storm - Culiacán, Sinaloa Videos & Photos as Violence Erupts"
1 hour ago
Mr. Sizzle posted a photo
1 hour ago
Mr. Sizzle favorited Maas's photo
1 hour ago
Mr. Sizzle favorited Diana's photo
1 hour ago
Raz Putin favorited Sweettina2's video
1 hour ago
Boris posted a status
2 hours ago
Raz Putin commented on Boris's status
2 hours ago
Raz Putin commented on Boris's status
2 hours ago
Raz Putin commented on Boris's status
"Deep State run drug cartel mercenaries armed to the tits! Yeppers you got know things are gonna…"
2 hours ago
Boris posted a status
2 hours ago

© 2019   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted