USD US Dollar Index Weekly Chart; Potential C&H

Here is an update on the US dollar index. Stockcharts uses the USD symbol (do not confuse the currency $USD symbol with the USD semiconductor ETF symbol) for the dollar, others use DXY, hence the dixie nickname. Keystone identified the bottom in the dollar with the positive divergence and voila, it occurs. The green lines show the overbot RSI and stochastics, the positive divergence, falling wedge pattern and lower band violation that created the bottom and pushed the dollar index higher. The stock market and gold sell off in the first-half of September as the dollar rises. If you remember, Keystone also called the top in gold in late July early August when the universal consensus said up and away.

The March bottom in the stock market up to the current elevated prices in equities, in this crash month of October, directly corresponds to the weakness in the dollar from March to present. The Federal Reserve rode in on its pale green horse, perhaps for the last time, and promised to print money forever to protect the wealthy class, and stocks took off higher through the summer into Fall. It's the best rally that Fed money can buy. Economic data improves because the Fed gooses the economy but then the data rolls over again. Markets and the economy need another shot of central banker heroin. Congress and President Trump are battling over a fiscal stimulus bill currently that will likely not happen until after the election and then money will not begin arriving in people's hands until a month after that. The wealthy elite class have really screwed the huddled masses this time and it will not be forgotten. The social unrest and coming class war will be all that much worse.

The MACD line bottomed as price bottomed but that is cheesy possie d. The MACD maintains its flatness, now higher, and creating a positive cross but the sogginess in the dollar price currently is mainly because the MACD had a few fumes of negativity left over in its gas tank (red line).

The blue lines show a potential cup and handle (C&H) forming which is a bullish pattern. The cup is late July, August and the first-half of September with a base to the cup at 92.30-ish. One-half of the handle is now formed so watch to see if price bows back upwards to finish the handle at the 94.60-ish breakout line for the C&H; the brim of the cup if you will. Thus, 2.30 is the difference between the brim and base of cup so if price breaks out above 94.60, the target is 96.90 right where the 50-week MA resistance is at. This price is easily doable which would surprise the massive amount of short players betting against the dollar. Just think of the potential rocket ship ride higher the dollar may experience, a la March, once the shorts begin to panic and start covering.

The chart looks good for dollar bulls which will be bad for stock market and gold bulls. The dollar is a buy going forward for several weeks. There is a gap left behind in late August as the dollar popped, due to short-covering, but prices then came down three weeks in a row to fill that gap. Price has not closed in that gap but the argument can be made that price does not have to come down further. Keystone's 80/20 rule says 8's seek 2's and 2's seek 8's so the breach of 93.20 on the downside opens the door to 92.80 which is the thin blue support line. Basically, the dollar is a buy anywhere in the brown circle and it is expected to continue a multi-week rally higher. The ROC is long and strong wanting price to make a higher high than 2 and 3 weeks ago up at 94.60-ish.

The stock market is very susceptible to a quick shock right now that can send equities sharply lower. This would be in concert with a rising dollar like March. Do not discount the possibility of a flash crash event or a Black (insert the weekday) occurring. Today is Tuesday so perhaps a Black Tuesday? or maybe a Black Friday? 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 Friday Morning, 10/16/20: DXY 93.64. Euro 1.1732.