Back in January I talked about how the US Dollar was on the verge of collapsingand recent developments are reinforcing my view. After breaking down from a major head and shoulder pattern in 08′, this currency had quite a violent throwback, causing many bears to reverse their position. Now that the chart has resumed the longer term trend, it appears to be in a very dangerous position. Should this pattern play out fully over the course of the next few years, it would ultimately have the dollar being in the 40’s.

Watch the ADX when it turns up and if the red -D1 is still on top, look out below. One other aspect to consider is the inter-market relationship between the dollar and the general markets. A falling dollar has been very bullish for the overall markets lately, but should the dollar find a bottom and rise from here (which is always a possibility), then the markets would be become weak.