Dollar Nearing It's Pinnacle

The dollar has skyrocketed with the recent market action (crash 2.0). My thesis remains that the market will bounce around the 1060 mark (10100 Dow). Looking at things from the reverse angle I see evidence that the dollar is topping. Let's review the pinnacle pattern starting with silver:

I've talked about this pattern before. We get a divergence between the RSI (blue indicator) and the composite RSI (red indicator). We also see stochastics top out after a brief dip. What is notable here is that this divergence marks the penultimate peak. There is often a final rally to a new high but note how the indicators are now moving in the opposite direction.

Gold:

I remarked on this in a previous blog post. Unfortunately I was caught off guard by the amount of time that elapsed between the peaks. Yet the pattern held.

S&P:

Again we see this pattern and this time the timeframe between penultimate peak and pinnacle is much longer. I believe the length of time between these points is related to how long the previous run-up took place. In the case of silver we had a very quick parabolic run-up and so the peaks were close together. For the S&P this run took place over 2 years and so the peaks were two months apart.

Francenstein:

Here we see the same pattern but notice how we didn't get a second pinnacle. I believe this was due to the Swiss intervention. They killed the monster with a heavy handed threat. You can see what would have been a bull market into a secondary peak truncated on the 1st of the month.

Dollar:

Fast forward to today and we see the same pattern on the dollar. This run-up has been exceedingly fast and so one would expect to see a pinnacle next week. This completely jives with my theory that the market will bottom next week and begin a rebound on the 1st of the month. The caveat here being that we want to see the composite index look like it did for silver: dropping as the dollar makes new highs.

It's worth noting that we do not see this pattern on treasuries. Quite possibly this means the bull market in treasuries will take longer to stamp out. This makes sense when you consider that the run-up in treasuries has taken place over 2 months as opposed to a one month run-up for the dollar. There are of course no guarantees that the pattern will show up, but when we do see the pattern it makes for a high probability short.