USD US Dollar Weekly Chart; Falling Wedge; Positive Divergence; Dollar Moving on Inflation Data; Federal Reserve Awaits PCE Numbers this Week

The dollar sure is unliked these days. If the Almighty Buck was on stage, people would be throwing rotten tomatoes and heckling. The greenback went to a party the other day and was told to get out; someone in the back of the room muttered, 'look at that green trash'. Well, beauty is always in the eye of the beholder. Maybe the US dollar is not so ugly after all and rumors of its demise may be premature.

There's a lot of spaghetti in the chart above as the buck moves sideways through the 97-100 channel for over a half-year. Everyone remembers the kid's song, On Top of Spaghetti. Does it feel that the dollar is moving sideways? The dollar has only moved within a 3% range for nearly 10 months. Let's back track down memory lane.

Keystone called the bottom in the dollar in July. No biggie. The falling wedge pattern is bullish. The RSI and stochastics were oversold agreeable to a bounce. The green lines show positive divergence across all indicators so it is on the launch pad fueled-up and ready to go, and voila, up and away. In late July, as the buck topped one hundo, lots of happy talk and Fed rate cut easy money tamps down the rally. That creates a slog into September.

The purple lines show price coming down for a matching or lower low so the indicators can be assessed for possie d and a potential bottom. That is another easy bottom call due to ongoing possie d. That creates a multi-week rally higher into the Thanksgiving top.

The small red bars show price making the matching high, but the indicators have all rolled over and are out of gas. It took everything they had to boost price above one hundo again, but the buck then fell on its sword receiving a neggie d spankdown. Ever since, the dollar stumbles sideways like a drunk in Times Square on the weekend, happy to be within the 97-100 channel muddling along.

The dollar once again comes down for a matching low as compared to the two lows from last summer and early Fall. Thus, mathematicians say thus a lot, that is why Keystone is not invited to the Presidents Day gala at the Moose Lodge, the positive divergence (green lines) remain in place hinting that dollar shorts may want to start clenching their butt cheeks.

The falling wedge is bullish. Price tagged the upper standard deviation band so a trip to the middle and lower bands were on the table, and occur, so with price at the lower band, a move higher to the middle band at 98.59 is on the table as well as the upper band at 100.48. The ADX shows that the last strong trend for the greenback was back in the spring and summer last year, as the dollar bottomed. Price is moving sideways through 97-100 for 10 months so there is no strong trend higher or lower just an ongoing sideways move.

The Aroom prints a negative cross (red circle). The Aroon verifies direction since it is a lagging indicator by a few weeks. The Aroon positive cross occurred at Thanksgiving just as the dollar was rolling back over to the downside. Maybe the dollar bounces as the negative cross occurs over the last month. The Aroon red line shows that nearly all the dollar bears remain bears, no surprise. The green line shows that half of the dollar bulls are bullish the buck, but the other half of the bulls are with the bears. Say, 75% of traders believe the dollar will fall while only about a quarter believe a rally will begin.

So what does all that mumbo-jumbo mean? The dollar slumped a little on the tamer inflation data and the PCE data on Friday will be important since it is the Fed's preferred gauge of inflation. The dollar shorts should be careful going forward since the chart is positive for the dollar.

The daily chart shows the same sideways funk but it is not tipping its hand either way in the daily timeframe. The dollar moves are news driven so it looks like traders will wait for the PCE data to see what is going on. Keystone is not playing the currencies currently. If short, you should consider scaling out of some of those shorts. Once this puppy decides to jump higher, the short-covering fuel will create a dollar orgy. Keystone will simply watch the dollar and let the PCE data impact the story but the choice going forward from here, right now, would be scaling out of dollar shorts and bringing on dollar longs.

The 97 support is holding because there is heavy price congestion at the 95-97 range from late 2021 and early 2022. Obviously, if 95 would fail, the dollar would be in serious trouble and the shorts will likely rule going forward. For now, the chart is more favorable to the dollar bulls going forward. Bulls win above one hundo. Bears win below 97 and win big below 95. Going forward, in a few weeks, one side or the other will have to say, 'I Was Wrong'. The dollar is at 97.00. 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.