USD (DXY) US Dollar Index Weekly and Daily Charts; Sideways Channels; Oversold; Positive Divergence; Price Extended to Downside; Everybody and His Brother Says Dollar Down

The US dollar index, USD, or DXY, dixie, prints a 2-1/2 year low this morning (back to 2018 lows) at 92.15 now at 92.16, call it the 92 line in the sand. Everybody and his brother expects the dollar to drop like a rock. Keystone has been talking about a recovery in the dollar the last couple months and you see the first positive divergence pop that occurred as forecasted. Keystone is lonely sitting on the only deck chair on this side of the boat. Everyone else is on the dollar short side of the boat swigging down Fed wine and ECB champagne and partying all night long. Keystone is left with stale pretzels and a flat can of soda; no one wants to join his dollar long party.

The buck is bouncing around in that sideways purple channels shown on the charts so obviously the exit below, or breakout above, will tell the dollar story ahead. The massive pop in the dollar in March is what flushed the US stock market, and gold, lower. Get ready for a Mach redux. The stock market is likely topping-out right now as per its charts and technicals so the question is what potential catalyst will occur to create that mayhem. The vaccine news and ongoing fiscal and monetary stimulus chatter continues creating the sideways channels. The dollar does not know which way to break as yet considering all the market cross currents. The control of the US Senate will not even be known until 1/5/21.

Despite the universal Wall Street consensus that the dollar will drop, the charts above say the dollar will pop. On the weekly, price will seek the middle band, the 20-week MA, at 93.54, and falling, and then up to that moving average sideways cluster area at 95.65-96.79. That sure will surprise everyone. Timmy Trader said he took all his clients money and placed it on dollar short bets since it is the no-brainer trade of the century. Timmy is bragging about his dollar shorts to Emily, the pretty administrative assistant, but she blows him off and tells him the technicals do not line up.

The dollar daily chart is positively diverged as price comes down for another matching or lower low. This 92 area is tricky. Keystone's 80/20 Rule says 8's lead to 2's and 2's to 8's. Thus, a breach and close or two below 92 opens the door to 88. The charts are universally positively diverged so the only expectation is for a bounce higher in the dollar and this would overrule the 80/20 rule, at least for now. Price is extended below the moving average ribbon on the daily chart so a mean reversion higher is desperately needed.

The only thing that could halt the move higher in the dollar would be news (vaccine, stimulus, geopolitics, etc..) but the charts would likely only need a little time to reset and then be in the same position as now again. The Fed may proclaim that they can print money forever for the umpteenth time, the fans will go wild, and the dollar will drop. Barring any of the usual nonsense, the dollar should pop going forward and stay on guard for the March redux. Things may get very ugly to end the year. The interesting thing is that as the dollar jumps higher and stocks drop like rocks, people will not be seeking gold for protection since gold and silver will be dropping as well (or sideways). Lots of fun is about to begin. Are you ready?

Ho! Whoa! Ho!. The dollar weakness continues. DXY drops to 92.09. The dollar bears cheer congratulating each other on how smart they are holding suitcases full of dollar shorts. Beads of sweat form on the dollar bull's foreheads and they wonder if the charts may have led them down the Primrose Path. Will the massive Wall Street dollar short crowd be correct or will the charts and technicals above be correct and the bounce in the buck occurs (with an accompanying drop in stocks and gold)? What are you going to do? 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 6:20 AM EST: US dollar index 92.09. Euro 1.1902. S&P futures +22. VIX 23.39. Gold 1866. Silver 24.09. US 10-year yield 0.85%.

Note Added 6:22 AM EST: US dollar index 92.08 Euro 1.1899. The tension is so thick you can cut it with a knife.

Note Added 6:28 AM EST: US dollar index 92.06 with a LOD at 92.04. She's testing the critical 92 line in the sand support. The dollar has to bounce or die from here; it is time to decide. Euro 1.1899. 

Note Added 7:45 AM EST: US dollar index drops to LOD at 92.03. Bounce or die. Euro 1.1902. Gold 1866.61. Silver 24.20.

Note Added 8:35 AM EST: US dollar index drops to LOD at 92.02 and now prints 92.06. Bounce or die. Euro 1.1895. Euro down, dollar up and euro up, dollar down.

Note Added 9:55 AM EST: US dollar index rises to 92.17. Is it bouncing. Are we witnessing the bottom in the greenback occurring in real-time? Bounce or die. Euro 1.1885. SPX 3589. Gold 1856. Silver drops -3% to 23.80.

Note Added 10:01 AM EST: US dollar index rises to 92.22, no check that, 92.28. It's catching a bid perhaps a short-covering rally is on tap as shorts panic? Euro 1.186. SPX 3584. Gold 1852. Silver 23.77. VIX 22.88.

Note Added 10:03 AM EST: US dollar 92.33 shooting higher. Euro drops to 1.1847. SPX 3583.

Note Added 10:07 AM EST: USD 92.36. HOD is 92.40 so watch that resistance number closely. That's a big move from 92.02 a little while ago, isn't it? Do you think the charts above are correct calling for a dollar bounce or is Wall Street analysts correct now doubling down on their dollar shorts? So far, the greenback bounces from the key 92 support level and line in the sand. Euro drops to 1.1842. SPX slips to 3577 off the initial 3590 high after the opening bell.

Note Added 10:10 AM EST: USD 92.45. Euro drops to 1.1829. SPX slips to 3576.

Note Added 10:53 AM EST: USD 92.57. It's a moon shot. Euro drops to 1.1818. SPX slips to 3571.

Note Added Tuesday Morning, 11//24/20, at 6:45 AM EST: USD 92.30. Euro 1.1879. SPX slips to 3578. S&P futures re up+29 on the happy news that Janet Yellen, Queen of the Doves, will head the Treasury. VIX 22.03. The dollar continues the battle at the 92 support.