Re-Examining The Dollar

The US Dollar Index has had a storied history the last few months. When I last looked at it publicly on May 18 in All About the Benjamins, it was about to confirm an Inverse Head and Shoulders pattern higher. Three months down the road, with a further weakening of the European economy, but with a view that the US and China are also slowing, where does it stand now? The daily chart shows a break above the neckline of that Inverse Head and Shoulders with two retests so far. The Relative Strength Index (RSI) has bounced around but held in bullish territory, albeit at the lows currently.

US Dollar Index Daily

The Moving Average Convergence Divergence indicator (MACD) is negative but starting to improve. The price objective from the Inverse Head and Shoulders at 90.60 stands on this time frame but it seems there is no hurry to get there with a move over 83.60 and 84 as guides. Pulling back to the weekly time frame shows a solid upward trend since September 2011. It is backed up by a RSI that is bullish and a MACD that is moving back higher after a brief stint in negative territory.

US Dollar Index Weekly

One other point of note is that it is printing a Golden Cross, with the 50 week SMA crossing up through the 200 week SMA. It is clear that there is little to stop it above the 83.60 before reaching the past 2010 peak and a full retracement of the move lower to 88.73. Stepping back again to the monthly chart shows a bull flag flying over the mid line of a symmetrical triangle at 81.28. The RSI is trending higher on this time frame and is ready to move to bullish with a MACD that is positive and growing.

US Dollar Index Monthly

There is resistance at the peaks at 86 and 88 followed by 92. Things look up the more patient you can be. Finally the 3-box reversal Point and Figure chart (PnF) carries a bullish price objective all the way up at 103. The US Dollar is still looking good. But it is sure taking its time on this move.

Disclaimer: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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