Gold forecast: Major currency collapsing

The U.S. Dollar Index chart below clearly shows a three year topping pattern with multiple price levels which when broken will trigger farther selling. These red horizontal lines on the chart show these price levels.

Critical support is around the 79.50 area which if breached should start a major wave of selling in the next few months. The initial wave of selling should take price all the way down to the 78.00 level before taking its first breather/pause.

*Trade Tip*
Most technical analysis books and traders think that the more times a support trend line has been touched the strong it becomes. That actually could not be any further from the truth.

Let me tell you how to trade trend lines.

1. You must have at least two pivot points (highs or lows) to be able to draw a trend line.

2. The 3rd and 4th touch of this line can be traded for a bounce.

3. Any touch of the trend line after the 4th is actually doing damage as it eats up the support volume.

4. A rising trend line like the one below clearly shows multiple pivot lows that when breached will trigger stops and flood the market with supply/sellers. It’s the perfect storm for a downward move.
 

Gold Forecast

My gold forecast has not changed in nearly a year as we wait for the gold market to bottom, then prove it’s self by breaking out of its basing pattern.

The bullish gold forecast is of the bigger picture. Most gold market traders and investors are caught up with the day to day price action and are growing tired of the range bound trading which gold has been doing for some time now.

Read More: www.resourceinvestor.com/2014/04/16/gold-forecast-major-currency-collapsing