Dollar alert : Take a deep breath

I think its time to post this chart :

Forget technical trading and all that stuff - this is a multi-year chart of the US dollar. The thing on the right that looks sort of like a "M" is the two bounces of first the financial crisis, and thereafter the european debt crisis. As you can clearly see, we are closing in on the bottom of the range for the dollar. Now, if the bottom line is broken, this is going to spook pretty much every currency trader in the world. And here is the real problem - at the last two bottoms in 08 and 09, pretty much everyone in the world was short the dollar. This means that sooner or later things had to turn around.

Currently, almost the entire retail crowd is LONG the dollar. What does this mean? Everyone is positioned for a reversal. That means that if the dollar breaks support, people start getting squeezed. This could potentially have a waterfall effect on the US dollar, and the problem is - what the heck is a US dollar worth these days? Who knows? As long as China keeps backstopping the dollar there is a safety valve - but if the dollar starts waterfalling then China is going to need to print RIDICULOUS amounts of yuan to keep it on par with the US dollar. And this could potentially trigger hyperinflation in China. Will they keep the suicidal currency peg? Who knows.

Forget financial crisis - we are about to enter the era of currency crisis. Hold on to your hats, this is going to be a bumpy ride.