Thursday, March 16, 2017

USD US Dollar Index Daily Chart; Sideways Channel and Triangle

The US dollar slips lower after the Fed rate decision yesterday. USD is at 100.64 currently moving lower. The lower dollar sends gold, silver and other metals and commodities higher. The chart above is a big bowl of spaghetti but each line provides a clue.

The ADX shows that the strong upside trend in the dollar petered out in early December. The overbot conditions, rising wedge and negative divergence (red lines) create the spankdown off the top to begin the year. Remember at that time, when Keystone pointed out the top in the charts which coincided with everyone and his brother, even the taxi cab driver, proclaiming that the dollar was going to explode higher from 103-104. The consensus is usually wrong. That was three months ago.

The USD dropped in January through the falling wedge with ovebot stochastics and positive divergence (green lines) bouncing price. The RSI did not reach oversold levels. The USD moves higher and in early March tags the upper brown channel trend line and the upper trend line for the purple sideways symmetrical triangle and violates the upper standard deviation band. The dollar retreats to the middle band and then to the lower band at 100.46 and lower so the middle band up at 101.33 is on the table.

The ADX, sideways 50 and 200-day MA's and price movement indicate a sideways move ongoing with price. If the USD moves sideways, then so does the euro. This morning, the dollar bounces slightly off the bottom standard deviation band and off the lower trend line of the purple sideways symmetrical triangle.

Price is teasing around the 50-day MA at 101.04. The 200-day MA is 98.24. It would not be unreasonable to see the US dollar index move sideways through this 98-101 range going forward and ultimately choosing a future direction depending on which side of this moving average bracket that price exits. In the nearer term, the purple triangle is in play with a vertical side in December at about 6 handles. Thus, if price falls under the 100.3-ish level, the 94-96 area will be targeted. If price breaks out above 101.8-ish, the dollar will seek the 106-108 area.

Use the brown channel lines as another indicator as to whether the dollar bulls will win (above 102) or the dollar bears (below 99). The battle rages on between 99 and 102.

The USD monthly chart is extremely telling displaying negative divergence across all chart indicators for the move higher in price over the last two years. This chart set-up should pressure the USD for many months ahead and lends credence to the idea above that the dollar may move sideways through the 50 and 200-day MA bracket for the weeks and months ahead. The projection at this time would be for the USD to move sideways through 95-101 for the rest of the year; probably choppy sideways with a steady slightly downward bias as the weeks and months play out.

The euro call is the mirror image of the dollar since these currency baskets contain majority weightings of each other's currency. The euro will likely move sideways through the remainder of the year with a steady slightly upward bias as the weeks and months play out (say, though 105-113). The euro is currently at 1.0719. The USD is at 100.55, moving lower, as the above windbag commentary is typed. Remember, the middle band at 101.33 is in play in the very near term. 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.

Note Added on Friday, 3/17/17: The USD is at 100.33. The USD fell to 100.14 a few hours ago teasing a 99-handle. Euro is at 1.0747. ECB’s Ewald Nowotny hints that a rate hike may be on the come sooner than expected so the euro is buoyant at 1.0781 earlier this morning and backs off to 1.0747. Analysts and traders expect the European Central Bank to adjust rates higher in 2019 but Nowotny hints that perhaps that may be pulled forward to September 2018. Nowotny opines about whether to raise rates or end QE first. The comments are in keeping with the euro moving sideways going forward.Central banker words move markets. The central bankers are the market and have been since March 2009. 

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