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The chart below confirms the major crossroad that the US Dollar is at. The potentially bullish inverted head-and-shoulders bottom pattern on the US Dollar Index chart has been negated, as evidenced by the market's failure at the neckline (e.g. shown in green). The bullish trend-channel pattern, depicted in red, has likewise been negated. However, the most significant potentially bullish pattern is still in play. In May of this year, the long term bearish trend-line (e.g. shown in blue), was violated to the upside. The market has since retraced to the trend-line, where it currently rests, thereby confirming the importance of this trend-line during this current period of heightened uncertainty in regard to global currency policies.
I believe the next move in relation to this trend-line will confirm the Dollar's fate for the next several years. Currencies tend to trend in years, versus months or weeks. On a final note, my experience does suggest that the two failed bullish patterns do tilt the probability toward an additional failure of the blue trend-line breakout. But a confirmation of this speculation is not yet at hand. Watch the blue line. I'll keep you updated.
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© 2012, Dominic Cimino of Preferred Planning Concepts, LLC (You can explore the services offered by Preferred Planning Concepts by viewing us on our website at www.ppcplanning.com) Any redistribution, reprinting, or reference to this chart or content is allowed so long as reference to the author and source is acknowledged.
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