The 1980s high was 150, talking about a 200 dollar target is much beyond the euro-dollar parity. What could be a few reasons a target beyond previous high at 150 may start assuming some probability? First: Dollar Index has made average 15-year cycles starting 1970’s. A bottoming cycle in 2008 at least suggests multiyear strength well into 2012. Second, Oscillators have made a multiyear non-confirmation of more than a decade. Non-confirmations of such large time frames could validate the time cycle case. Third: The formation from 1985 looks more like a completing corrective than a trend. This means even if we assume an ongoing counter-trend, prices could reach back to previous highs at 150.
Further questions which come to mind are how can dollar rise, while commodities also strengthen? What happens to the US crisis? We don’t have answers to these questions yet. But what we can tell you is that time cycles might lead, lag and adapt to Intermarket conditions. How time cycles do it remains to be seen.
Key levels to watch lie at 80. Above 80 the surprise of the decade is probable.
