Tuesday, January 24, 2017

USD US Dollar Index Weekly Chart; Sideways Channel

Keystone highlighted the US dollar index chart a few days after Christmas identifying  the negative divergence (red lines) at play. The majority consensus were calling for a huge move higher in the dollar index from 104. The bullishness on the dollar was rampant. The market consensus was wrong, as is usually the case, and the neggie d spanks price lower over the last month as forecasted. Traders rushed in to buy the USD at 104 expecting huge upside instead they have lost -4% of their money over the last month. If they would have simply noted the negative divergence they would have never made that bullish dollar trade.

The dollar is back kissing the top rail of that blue long-term sideways channel. The dollar will bounce or die from this level on the weekly basis. The indicators are weak and bleak wanting lower lows for the dollar after any bounce occurs in the weekly time frame. The MACD cross turns negative. Price has to decide if it wants to return inside the safety of the sideways channel, or, if a new sideways range is in play above one hundo.

The ADX is in the cellar which  verifies that the upward trend in the USD was not a strong trend. The tight standard deviation bands squeezed out the big upside move from October (pink arrows). The upper band was violated so the middle band at 99.61, also the 20-week MA, is in play and overnight, the USD prints a 99-handle exploring this level. A firm touch of the middle band should occur. The dollar weakened overnight from 1/23/17 into 1/24/17 due to President Trump's pick for Treasury Secretary, Steven Mnuchin, an ex Goldman Sachs man, stating in a written statement that he thought the 'dollar was excessively priced in the near term'.

Price may bounce off the trend line support now and seek 101.80-ish in this near-term but the expectation would be for a further sideways to sideways lower move for the dollar going forward. The sideways channel at 97.3-ish through 100.0 may be the destination for the dollar basket for the weeks and months ahead. Also, the 97.3-101.8 may prove to be the preferred path ahead for the dollar into spring and summer. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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