Will It End Soon? – October 8, 2009
As commodities continue to move upward, the break down of the dollar continues and seems to be the main “culprit” in the rise of the most commodities (including gold). Previously, I had posted that I was hopeful the dollar had bottomed. Obviously, this is not the case. So, based on the present action, I have updated my dollar chart and developed a price projection based on E-wave relationships.
First, looking at the monthly chart, I get a perspective of the dollar’s current level. The actual low in the dollar came in late April of 2008 at 73.845 (basis the continuation contract, this is not spot). So, the today’s low of 75.68 basis the futures is quite a bit higher even though it is a 17 month low.
Looking at the weekly chart, it becomes a bit clearer that the dollar may have a bit more to fall if it is going to settle at a level where the current decline stops at the level where wave 1 = wave 5. That would put the dollar at around 75.20 – 74.40, depending on where you measure wave 4 from. Other than these calculations, there are not any other good E-wave projections as the current decline has blown through them all. I think it’s sufficient to say that, yes, the dollar is terribly oversold. A rally will likely unfold. However, the sell off may have a bit more to go.