Tuesday, May 30, 2017

USD US Dollar Index Weekly Chart; Long-Term Sideways Channel; Near-Term Downward-Sloping Channel; Lower Band Violation

The US dollar index has been trending lower ever since the top in December. The negative divergence with the indicators told you that the 103-104 high in the dollar is all she had late last year. This was at the same time as the US dollar bulls and television pundits were wildly enthusiastic for a higher dollar predicting price targets at 110, 115 and even 120. Of course the consensus was wrong as usual. All they had to do is look at the neggie d and they would have bit their tongue.

Note the downward-sloping red channel this year. Price is trying to bounce off the lower rail which is also a price support area over the last couple years. Price may want to head higher towards the top rail of the channel. The USD fell through the 50-week MA at 98.69 and a back kiss would be expected. This area at 98.70-98.80 is an upside target should the dollar begin recovering. Then the one hundo level, the thick blue line which is the top rail of the long-term sideways blue channel, may be tested.

On the downside, the USD may test the 96 level which is price support and the bottom rail of the red channel. Then a slide to test the lower long-term blue channel trend line at 93.50 would be on the table.

The USD collapses under its lower standard deviation band over the last two weeks. This lower band violation forecasts a move higher to the middle band at 100.00, and falling. The stochastics are oversold which helps create a bounce in price. Overall, the indicators are weak and bleak with the MACD line, histogram and ROC continuing to trend lower. This hints that price will come back down for lower lows after any recovery move occurs in this weekly time frame.

The RSI has not reached oversold territory so the US dollar index may be in for a very slow and long grind lower over many  months; a sideways to sideways lower trend; a very slow bias lower. The USD may travel through 96-99 through the summer and then continue a very slow downward bias.

The euro chart is the mirror opposite of the dollar since the currency baskets contain a majority of each other's currency. Thus, the euro will move sideways to sideways higher. Interestingly, ECB President Draghi promises never-ending QE easy money yesterday, and the euro sags from 1.1180 to 1.1125 as would be expected but is already recovering to 1.1168. Despite the promises of easy money forever from the European Central Bank, the euro is not moving any lower. Are the central bankers losing control? That is a question for another day. 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 Monday Morning, 6/5/17: USD is at 96.77 with a low last week at 96.58.

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