DXY just put the Dollar Milkshake back on the menu
Updated
Background
For years I have been fascinated by the Dollar Milkshake Theory of Brent Johnson out of Santiago Capital. In the broadest strokes, there will be increased dollar demand as the fiat system collapses because all the other fiats will collapse and then the Dollar will be the last fiat standing before the fiat system is replaced (somehow). This leads to some oddities in theory. US assets/equities will go up in value against non-us assets while the dollar goes up itself as people seek a hedge against the strong dollar. International trade of equities and futures allows this to happen in a way that would be unfeasible just a few decades ago. And if for some reason you can't buy US equities? Then you buy anti-fiats like precious metals or whatever de-fi stable coin you can.
Whenever the dollar rises Brent is praised for his theory and whenever it declines he is slagged. In either case he is humble and clarifies he has a theory and his company hedges against the theory and it isn't the whole portfolio.
But DXY has put the Dollar Milkshake on the menu.
Analysis
Few things have been more successfully for me in my long term investments than use of the weekly and monthly bollinger bands when combined with some divergence, basic charting, and even a half ass reliable fundamental analysis. Please review my linked idea on chain-link for my best example thereof and an earlier prediction on DXY. Shown is the monthly chart of DXY with the monthly and weekly Bollinger bands.
Checklist
Suppositions
Macro Devastation
Perhaps the most devastating thing about our current environment is the effective federal funds rate is in a falling wedge. There was a while where I was supposing the nominal rate would go to zero but that turned out to not be the case. But the real interest rate has been zero by official stats, and by shadow stats, and by the fact I can get up to 11% on USD stable coins on various defi/staking platforms. If the dollar is rising and interest rates on dollar loans are rising this will cause havoc on a global stage. The financial news will be in hersterics and at no time will they blame fractional reserve banking or how central banks facilitate the addiction to sovereign debt. Oh well.
Recommendations
For years I have been fascinated by the Dollar Milkshake Theory of Brent Johnson out of Santiago Capital. In the broadest strokes, there will be increased dollar demand as the fiat system collapses because all the other fiats will collapse and then the Dollar will be the last fiat standing before the fiat system is replaced (somehow). This leads to some oddities in theory. US assets/equities will go up in value against non-us assets while the dollar goes up itself as people seek a hedge against the strong dollar. International trade of equities and futures allows this to happen in a way that would be unfeasible just a few decades ago. And if for some reason you can't buy US equities? Then you buy anti-fiats like precious metals or whatever de-fi stable coin you can.
Whenever the dollar rises Brent is praised for his theory and whenever it declines he is slagged. In either case he is humble and clarifies he has a theory and his company hedges against the theory and it isn't the whole portfolio.
But DXY has put the Dollar Milkshake on the menu.
Analysis
Few things have been more successfully for me in my long term investments than use of the weekly and monthly bollinger bands when combined with some divergence, basic charting, and even a half ass reliable fundamental analysis. Please review my linked idea on chain-link for my best example thereof and an earlier prediction on DXY. Shown is the monthly chart of DXY with the monthly and weekly Bollinger bands.
Checklist
- The Dollar Milkshake theory is AT LEAST some half assed fundamental theory.
- We were against both weekly and monthly Bollinger bands
- Basic charting shows zone that has flipped from resistance to support and we are now testing it as support again
- the MACD suggest a bullish cross of the sigil line is highly likely
- The MACD suggest that the MACD will cross above zero.
Suppositions
- DXY at least reaches the purple trendline
- DXY thrust upwards mightily above the purple trendline and then attacks it again as support
- DXY battles its way valiantly though the grey area of resistance
- The Weekly Bollinger band will again act as resistance as DXY channels upward.
Macro Devastation
Perhaps the most devastating thing about our current environment is the effective federal funds rate is in a falling wedge. There was a while where I was supposing the nominal rate would go to zero but that turned out to not be the case. But the real interest rate has been zero by official stats, and by shadow stats, and by the fact I can get up to 11% on USD stable coins on various defi/staking platforms. If the dollar is rising and interest rates on dollar loans are rising this will cause havoc on a global stage. The financial news will be in hersterics and at no time will they blame fractional reserve banking or how central banks facilitate the addiction to sovereign debt. Oh well.
Recommendations
- I don't give financial advice. I personally like digital currencies as opposed to digital stores of value for the next 18-24 months.
- Get rich or stay poor.
Note
DXY is continuing to base out in a very interesting way. It is beginning to look like a W pattern is forming which would create a complex head and shoulders or some other formation and a quick move to low 93 seems very probable. Beyond that we get a bit more speculative but based on this triangle formation I see developing we can spend much of 2022 and 2023 heading towards the resistance lines.
The purple line is resistance drawn on the monthly candles and the blue line is drawn on the weekly.
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