October 14, 2013
With the US Dollar Index still trading very close to the psychologically key level of 80, today top Citi analyst Tom Fitzpatrick warned King World News that the dollar is now set to plunge. Below is the timely Fitzpatrick commentary, along with the chart which illustrates the dollar is set to take a major hit.
Here is what Fitzpatrick had to say, along with his key chart: “Near-term price action around resistance levels on the USD Index (80.50-80.75) suggests a turn back down is now likely. Overall a move towards support levels at 78.60-79.00 should be seen with the possibility of an extended move to 76.50 (see chart below).
The bounce on the USD Index up took it back to, and slightly above, the double top neckline at 80.50. Short-term horizontal resistance levels are at 80.65-80.75 (previous interim highs and lows). The failure to sustain above these levels suggests that the downtrend is still in place…..
“A closer look at the price action reveals a doji candle (open = close) at the recent high reflecting indecision at these levels (see insert).
Overall we expect the general short-term move down to continue and take the Index towards support levels at 78.60-79.00. A weekly close below those levels would open the way for a move to the extended target of 76.50 – measured from the double top setup.”
King World News note: If Fitzpatrick is correct that the US dollar is set to aggressively plunge, this may signal that the gridlock in Washington will get more serious in the days ahead. All of this should be constructive for both the gold and silver markets as well.