US Dollar Daily Chart; Falling Wedge; Positive Divergence; Lower Band Violation; Price Extended

A dollar pop will surprise everyone considering that 99.9% of Wall Street and Main Street are short the buck. The cable repair guy says he took an entire two paychecks and went short the dollar. He declares that everyone knows the dollar is guaranteed to move lower.

A few days ago, Keystone showed you the pop in the dollar from the possie d on the daily chart above. A few-day rally was expected, however, price was then expected to come back down for a matching low due to a weak and bleak MACD line on the weekly chart. The weekly chart can be commented on below but first let's stick with the daily that is setting up to bounce.

Just think, once the shorts start panicking, the dollar will explode higher like a rocket ship and harpoon the US stock market a la March redux. Interestingly, the standard deviation bands are squeezing in tight so a huge move is coming for the US dollar. Tight bands (pink arrows) forecast a huge move but do not predict direction.

USD, or DXY, dixie, is at 92.16. This is a lower low so the chart indicators can be checked for positive divergence. All indicators are possie d (green lines) so the dollar is on the launch pad and fueled up in the daily time frame. Beads of sweat are forming on the dollar shorts' foreheads.

Price is extended below the moving average ribbon so a mean reversion higher is on the table. The lower band violation places the middle band at 93.10 and upper band at 93.83 on the table. The ADX continues to indicate that the move lower in the dollar the last few months is a strong trend lower but is a weaker trend lower over the last three weeks. The Aroon red line is moving down off overbot levels and the green line sits in the oversold spot both indicators are bullish going forward. Look for the potential positive Aroon cross.

The tight bands do not forecast direction but the possie d does and it says up. It will be interesting to see how much the shorts panic once the dollar starts moving. So the dollar daily chart is set up to move higher; tomorrow will be interesting.

On the dollar weekly chart, all indicators are positively diverged except the MACD line that is weak and bleak like a week and two ago. The possie d on both charts will conspire to pop the dollar higher in the daily time frame. The weak MACD line on the weekly hints that the dollar will then once again want to come back down for another matching low after a few-day rally. However, if the dollar takes off like a moonshot right now, with shorts covering like madmen, the candlestick price shape on the weekly chart will change as well as the MACD which may actually show a bottoming and the automatic start of the multi-week rally for the dollar.

Thus, the dollar should bounce now at least for a few days and then roll back over again maintaining that August pattern. At that time, say a week or two out, the MACD line will be possie d on the weekly chart and the dollar will be launching into a multi-week up move. Obviously, dollar shorts will be covering and running for their lives. The other outcome, as mentioned, is simply a rocket ride from here. Look at March. USD pops from 95 to 104 in a heartbeat nearly 10 big figures. Oh my. Keystone has to take a chair and dissolve a glycerin tablet under the tongue after such shocking news. If the dollar repeats the March move, as the shorts panic, the dollar would pop from 92 to 101 in a heartbeat. What a sight that would be. 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 9:40 PM EST: USD drops to 92.08. Euro pops to 1.1959. Germany is a huge car exporter and needs a cheaper euro.

Note Added Tuesday Morning, 9/1/20, at 4:30 AM EST: USD drops to 91.93; a 91-handle. LOD 91.75. The euro is pumped to 1.1980. S&P +13. VIX 25.61.

Note Added Tuesday Morning, 9/1/20, at 5:46 AM EST: USD drops to 91.89. The euro is pumped to 1.1980. S&P +12. VIX 25.70. Analysts say Germany and Europe as a whole will not begin complaining and worrying about the euro unless it climbs to 1.25-1.30. The DAX is trading soggy sideways as the euro moves higher over the last couple weeks so it looks like Germany's key index is stalling now as the euro climbs. DAX is up +0.6% currently. Recapping, the dollar is expected to bounce again in the daily time frame and rally for a few days. At that juncture, there are two paths forward. The MACD line is weak and bleak on the weekly chart so the dollar would be expected to roll back over lower after the few-day rally, print a matching low, the MACD will turn possie d, and that will begin a multi-week rally for the dollar, or, the shorts panic and the dollar spikes vertically with the stock market and gold collapsing a la March. Choose your poison. The multi-week rally in the dollar will not begin until the MACD line on the weekly chart turns possie d which will likely be anytime over the coming week or two. If shorts panic, all bets are off and the dollar will spike wildly vertical and the weekly rally will begin. The dollar is bumping along sideways currently at the low numbers (91.80-92.00) for the last seven-plus hours (trying to stabilize sideways right now).

Note Added Tuesday Morning, 9/1/20, at 6:37 AM EST: USD 91.84. The euro is pumped towards 1.1990. S&P +11. VIX 25.63. The dollar is moving flat as the euro climbs higher.

Note Added Tuesday Morning, 9/1/20, at 7:25 AM EST: USD 91.86. Euro 1.1978. S&P +8. VIX 25.69.

Note Added Tuesday Afternoon, 9/1/20, at 5:01 PM EST: USD 92.30. Euro 1.1916. The euro tagged 1.20 and pulled back. SPX prints a new all-time high at 3528.03 despite the dollar moving higher.

Note Added Wednesday Morning, 9/2/20, at 3:30 AM EST: USD 92.56. Euro 1.1875. S&P +17. VIX 26.02. The dollar is moving higher but futures are up. Time will tell if the euro longs and dollar shorts panic. Futures are pumped higher on happy vaccine talk and stimulus promises.

Note Added Thursday Morning, 9/3/20, at 4:05 AM EST: USD 92.91. The dollar prints above 93 at 93.07 as the euro drops. Euro is at 1.1826 but printed a 1.17 handle a short time ago. S&P +2. VIX 26.14. The dollar is receiving the possie d pop on the daily chart. Look at the USD, or DXY, weekly chart. The MACD line over the last two weeks, as price made another lower low, is flatter than a newlywed's souffle. That is positive divergence. It s very likely the dollar is putting its low in on the weekly chart now rather than in a week or two. If the dollar shorts and euro longs begin panicking, it may be quite a sight; a February-March redux.

Note Added Saturday Morning, 9/5/20: USD 92.97. Euro 1.1838.