How much can the Dollar fall?
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The general perception in the market is that the Dollar is near the end of its bull run, and there are heavy odds building up against it. The factors working against the US Dollar are:
An expected slowdown in the US economy, from 4.8% in 2000 to 3.2% in 2001
A possible Bear market in US Equities as a result of the above, which can lead to an outflow of capital from the USA
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Without examining the probability of such an event, we focus on "How much can the Dollar fall?"
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Possibility I - We may have already seen the Top at 1.8310
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If the Dollar has already registered a high, then a Correction can bring it down to roughly 1.70 or 1.67, as shown in the table alongside
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This is confirmed by the Trendlines drawn on the Weekly Chart alongside.
It is to be noted that while a fall to 1.67 is possible, such a fall will not violate the Uptrend which started in October 1998, and can, at best be termed a Correction of the present uptrend.
Only a fall below 1.65 will open up the possibility of 1.62-1.60-1.57 and 1.50.
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Possibility II - The Top is yet to be seen, and may register near 1.85
If the Top has not been registered as yet, it may kick in at the Weekly Trend Resistance near 1.85-1.87 in December, as shown by the Red marker on the chart above. If that be so, then by the above Fibonacci Retracement calculations, the Correction Objectives would be 1.7140 and 1.6820
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