US Dollar Collapse Imminent !
- Although, I probably appear as ‘the boy who cried wolf many times’, I am going to sound this alarm again: the USD collapse is imminent. At the end of the story of the boy who cried wolf, the wolf really did come! Frederic Simons gives a simple technical analysis :
We don’t like to make bold predictions. But this time, it is different (famous last words). ….. Then we came across the following daily chart of the USD. When looking at a chart from a technical analysis viewpoint, you either immediately observe “your trade”, or there is none.
To us, this chart is looking more than spectacular, as it displays a big descending triangle formation, which looks pretty much as if it will be resolved as it should. To the downside.
Now, the height of the pattern is about 11 points. From the breakdown point, which will be reached as prices fall below the two red horizontal lines around 78, the measured move to the downside will equal the height of the pattern.
This amounts to a price target of around 67 in the USD index. And as prices tend to move lower quickly when breaking down, the future chart may look like this in a few weeks time (see above chart).
This is looking nasty, isn’t it ? How to play this ? There are certainly a lot of ways to do it, and everybody has his own preferences. It looks however interesting to buy either some put options on the DX Future, or some EUR/USD call options. The big advantage of options is that you will have big leverage for relatively small change, with a limited risk of loss. In addition, if the USD should actually crash, implied volatilities will explode to the upside, which will add to the value of the options, making profits even bigger.
As far as the implications of a Dollar crash for precious metals and the bond market are concerned, we can only say: they might be of historic magnitude, and mark important upside breakouts for precious metals, and breaks to the downside for bond prices.
We think that when the USD crash comes, it will start with a big move, has little retracements, and take no prisoners.
Sorry, the comment form is closed at this time.