The US dollar remains in a rising channel within long-term channels that point to very different outcomes.

The rising white channel intersects just ahead with the larger falling white channel upper bound, the rising red channel mid-line and the 75% bound of the falling purple channel.

Whether the red or purple channel carries the day will depend largely on whether the ECB or the Fed can deflate its currency the fastest.

But, the intermediate-term picture is clear:  if DX can hold the white channel, the next move should be much higher.

continued for members…

The next major objective is the .886 of the June 2010 to May 2011 decline (white pattern) at 87.07. But, this should come in phases.

My leading scenario is a rally to the .yellow 786-.886 (83.06-83.62) to coincide with equities’ 10% correction into year end.  This would be followed by a corrective wave of 2-3 months duration, then a more powerful rally to 87.07 into May 2013.

This represents a 4.4% move from current prices — equivalent to that which was seen in the wake of the July – August 2011 equities crash.

The decline since Nov 16 should be just about done.  The .618 retrace is at 79.945, and in addition to approaching the white channel lower bound, DX appears to have neatly back-tested the recently broken falling channel it broke out of on Nov 7.