Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Venezuela’s Hyperinflation Drags On For A Near Record—36 Months - 18th Nov 19
Intellectual Property as the New Guild System - 18th Nov 19
Gold Mining Stocks Q3’ 2019 Fundamentals - 18th Nov 19
The Best Way To Play The Coming Gold Boom - 18th Nov 19
What ECB’s Tiering Means for Gold - 17th Nov 19
DOJ Asked to Examine New Systemic Risk in Gold & Silver Markets - 17th Nov 19
Dow Jones Stock Market Cycle Update and are we there yet? - 17th Nov 19
When the Crude Oil Price Collapses Below $40 What Happens? PART III - 17th Nov 19
If History Repeats, Gold is Headed to $8,000 - 17th Nov 19
All You Need To Know About Cryptocurrency - 17th Nov 19
What happens To The Global Economy If Oil Collapses Below $40 – Part II - 15th Nov 19
America’s Exceptionalism’s Non-intervention Slide to Conquest, Empire - and Socialism - 15th Nov 19
Five Gold Charts to Contemplate as We Prepare for the New Year - 15th Nov 19
Best Gaming CPU Nov 2019 - Budget, Mid and High End PC System Processors - 15th Nov 19
Lend Money Without A Credit Check — Is That Possible? - 15th Nov 19
Gold and Silver Capitulation Time - 14th Nov 19
The Case for a Silver Price Rally - 14th Nov 19
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19
Gold and Silver - The Two Horsemen - 11th Nov 19
Towards a Diverging BRIC Future - 11th Nov 19
Welcome to the Zombie-land Of Stock Market Investing - 11th Nov 19
Illiquidity & Gold And Silver In The End Game - 11th Nov 19
Key Things You Need to Know When Starting a Business - 11th Nov 19
Stock Market Cycles Peaking - 11th Nov 19
Avoid Emotional Investing in Cryptocurrency - 11th Nov 19
Australian Lithium Mines NOT Viable at Current Prices - 10th Nov 19
The 10 Highest Paying Jobs In Oil & Gas - 10th Nov 19
World's Major Gold Miners Target Copper Porphyries - 10th Nov 19
AMAZON NOVEMBER 2019 BARGAIN PRICES - WD My Book 8TB External Drive for £126 - 10th Nov 19
Gold & Silver to Head Dramatically Higher, Mirroring Palladium - 9th Nov 19
How Do YOU Know the Direction of a Market's Larger Trend? - 9th Nov 19
BEST Amazon SMART Scale To Aid Weight Loss for Christmas 2019 - 9th Nov 19
Why Every Investor Should Invest in Water - 8th Nov 19
Wait… Was That a Bullish Silver Reversal? - 8th Nov 19
Gold, Silver and Copper The 3 Metallic Amigos and the Macro Message - 8th Nov 19
Is China locking up Indonesian Nickel? - 8th Nov 19

Market Oracle FREE Newsletter

$4 Billion Golden Oppoerunity

US Dollar: 'Rumors of My Death are Greatly Exaggerated'

Currencies / US Dollar Feb 13, 2017 - 01:46 PM GMT

By: Rambus_Chartology

Currencies

Today I would like to update the US dollar as its been testing critical support since breaking out from the nearly 2 year horizontal trading range in early November of last year. The daily line chart shows there was a nice clean backtest about a month later to the top rail which looked like breaking out and backtesting process was complete. After a short rally and making a higher high the US dollar declined once more to the top rail causing a lot of uncertainty for many traders. After a slight breach of the top rail the US dollar is now trading back above that very important trendline. So far at this point there is nothing to conclude the bull market that started in 2011 is over at least accordingly to the daily line chart.


US Dollar Index Daily Chart

This next daily chart for the US dollar is just as important as the horizontal trading range we looked at on the chart above. I don't believe anyone else has recognized the double H&S bottom that has formed on the right side of the horizontal trading range. As you can see there were two backtests to the neckline which came in at the same area about 2 months apart which have held support. The six week correction from the recent high has given most of the indicators time to reset as shown by the red circles. The neckline at 98.85 still remains critical support.

US Dollar Index Daily Chart 2

Next lets look at some longer term weekly charts and the bull market that began in 2011. This first weekly chart shows the US dollar in linear scale and the 2 consolidation patterns we looked at on the charts above. The bottom rail of the major uptrend channel has done an excellent job of holding support as shown by the many touches which tells us that rail is very hot and to be respected. The bottom rail of the major uptrend channel also helped in the development of the double H&S bottom as the head and both the bottoms for both right shoulders formed on that trendline. One last note on this weekly chart which shows the 30 week ema held support during the US election spike and then again 2 weeks ago when the price action was backtesting the neckline.

US Dollar Index Weekly Chart

Below is another weekly look at the bull market uptrend channel that is slightly converging in log scale. Big bases lead to big moves and with the 5 1/2 year, 8 point diamond this bull market in the US dollar should have a long ways to run yet. This log scale chart also has a slightly higher price objective than the linear scale chart for this next impulse move up which should be to the 117 to the 120 area as shown by the blue arrows. As I've said previously, if the US dollar breaks below the bottom rail of the major uptrend channel I will wave the white flag and surrender to the bears, but until that happens I have to remain a bull regardless of all the reasons the US dollar needs to collapse.

US Dollar Index Weekly Chart 2

This next weekly chart is a combo chart which has gold on top and the US dollar on the bottom. This chart shows the major positive divergence for the US dollar to gold made back in 2011 as shown by the purple arrows. In 2008 gold was topping out just before the big crash while the US dollar was bottoming. From the 2008 crash low gold went on to make its bull market top in September of 2011. As gold went nearly vertical into its all time high you would have thought that the US dollar was crashing and burning. As you can see the US dollar actually made a higher low vs its 2008 low which is where the positive divergence took place and the beginning of the US dollars bull market.

Since the bull market top in 2011 gold has been declining in a bear market with the top rail holding resistance. That top rail comes in currently around the 1305 area which will be the defining line between the bull and bear market for gold. If gold can trade back above that 2011 bear market downtrend line that will be a very big positive that the bull market is back in earnest. On the other hand if gold fails to take out that very important top rail of the bear downtrend line the bear market lives on.

US Dollar Index Weekly Chart 3

Below is another weekly combo chart which has the US dollar on top and gold on the bottom. This combo chart shows the major 2011 uptrend channel for the US dollar and the major 2011 downtrend channel for gold. Over the last year or so you can see the inverse correlation between the US dollar and gold as shown by the H&S bottom on the US dollar and the H&S top on gold, brown rectangle. The neckline and the top rail of the 2011 bear market downtrend channel intersect at the 1305 area which again is going to be the inflection point between the bull and bear market IMHO.

US Dollar Index Weekly Chart 4

The weekly chart for the UUP US dollar fund, shows the nearly 2 year correction as a bullish falling flag. A complete backtest to the top rail was almost achieved two weeks ago at 25.50.

UUP Weekly Chart

The longer term look at the UUP shows a previous bull flag that formed at the end of the major downtrend channel and gave the UUP the energy it needed to finally breakout and begin its new bull market.

UUP Weekly Chart 2

This last chart for tonight is another proxy for the US dollar which is the USDU index which has a more equal weighting of currencies. This index hasn't been around very long but it to is showing an uptrend channel with the 30 week ema offering support two weeks ago.

Wisdom Tree Bloomberg US Dollar Bullish Fund Weekly Chart

The last time the US dollar embarked on its impulse move up starting in the middle of 2014 and ran to March of 2015 currencies and commodities took a big hit. This is why it's so important to get the major direction of the US dollar right as so much depends on which way it moves especially in the intermediate term.

All the best

Gary (for Rambus Chartology)

http://rambus1.com

FREE TRIAL - http://rambus1.com/?page_id=10

© 2017 Copyright Rambus- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Rambus Chartology Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules