Gold up, dollar down, stocks up: it works until it doesn't

Today saw a new swing low in the dollar and another new high in gold, along with the yen ($XJY) moving higher as I've been projecting for, oh, a year now. Gold is looking like it's taking the $1192 target seriously enough to keep pushing up to that. While the dollar index ($USD) just dropped neatly under the 74.75 that's widely watched as the .786 retrace to its prior low. Will the dollar recover and reverse, with a corresponding turn in gold? We're disposed to think so - interesting these numbers are coming together around the same time - and there's at least one authority (not sure I can quote) that sees this time window as a likely reversal time in gold. But on the daily charts, such turns must take from one to three days to work out. So as we wait, we can enjoy the Thanksgiving holiday with family and friends ... And contemplate charts like the one below. The folks at "Chart of the Day" selected the same topic that many were buzzing about today. Notice they produced their chart just before today's drop. But their point about the trendlines is good - any trend reversal must break out against the downtrend line. Let's take a look:

Thanks in part to mounting US deficits and a weak US economy, the US dollar continues to trend lower. After all, a virtual collapse of the banking sector does have its consequences. For some perspective, today's chart illustrates the current trend in the US dollar (blue line) as well as that other world currency, gold (gray line). As today's chart illustrates, the performance of the US dollar has varied inversely to that of gold since the latter stages of the credit bubble. It is worth noting that the US dollar is currently testing resistance of its downtrend (red line) while gold makes record highs.

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Quote of the Day
"Regardless of the dollar price involved, one ounce of gold would purchase a good-quality man's suit at the conclusion of the Revolutionary War, the Civil War, the presidency of Franklin Roosevelt, and today." - Peter A. Burshre

Notes:
Chart of the Day is provided without warranty of any kind and accepts no responsibility for its accuracy or for any consequences of its use. Journalists and bloggers may post the above free Chart of the Day on their website as long as the chart is unedited and full credit is given with a live link to Chart of the Day at http://www.chartoftheday.com.