The US dollar is getting a lot of attention lately, and not just from alternative media sources, but the mainstream financial media as well.
In my opinion the meteoric rise with regard to the value of bitcoin and other cryptocurrency's is reflective of declining investor sentiment with regard to the US dollar. On the other side of this are those who believe that a dollar turnaround is eminent. Well is it?
I would like you to have a look at the chart below.
This is a six month daily chart reflecting the price action of the US dollar.
It is simple to see the during this six month time-frame the US dollar has been in more or less a steady decline.
I would like you to take notice to the purple line, this is the 50 day moving average. I would also like you to take notice of the blue line, this is the 200 day moving average. Now, I circled for you on the right side of this chart where these two moving averages continue to move closer together.
The fact that these two moving averages are moving closer together, and if this trend continues will converge, is very important.
The crossover of the 50 day moving average below the 200 day moving average is very significant.
If this trend continues, the 50 day moving average will move below is the 200 day moving average, and this is known as a death cross.
A death cross is seen as a bearish technical signal, which means that further losses are not guaranteed, but are likely.
If the trend with regard to the dollar continues, and this death cross does manifest itself what does it mean?
A continued decline in the dollar value will cause prices to inflate as the purchasing power of the dollar is lost, (inflation which could potentially reach catastrophic levels at one point).
In my opinion it also means that we will see The value of cryptocurrency continue to increase in value. Also, in a real market (for which there is none with regard to gold and silver) we would see their value rise as well.
So what's the take away here?
If the current downward trend with regard to the US dollar continues, and the death cross is realized, we should expect to see inflation, a rise in the value of cryptocurrency, and if we had a real market, an exponential rise in the value of physical gold and physical silver.
The real take away..
If the death cross is realized who knows how much further the dollar will fall.
Gregory Mannarino
