The US Dollar Index has made a big move higher since mid 2014. The world’s financial landscape is changing, and several markets, including the Forex, are in flux. How this shakes out longer-term is another story, but over the near term the US Dollar chart pattern may be setting up for a countertrend move.
My particular skill set is finding PATTERNS that repeat based on musical math and then take a look at the landscape and decide whether to take on the risk (and how much). We never know which PATTERNS will work but we do know where to limit our risk based on the pattern (i.e. set stops).
In the end, I also realize that there is a balance to the financial markets in that the fundamentals, the technical and the human condition all come together and a trend is made.
That said, the PATTERNS are showing a reason to SHORT the US Dollar Index. I’ve written extensively about the Euro and per my recent post, I’ve been trying (the operative word) to find a logical place for the Euro to stop it’s waterfall and start a countertrend bounce higher so I can look for another short opportunity. All that to say, if the Euro is nearing a bounce, then the US Dollar may be set to pullback.
Below, you will find the USD Dollar Index monthly chart… EVERY SWING has been exact in price from 1992-1998 US Dollar chart pattern. On Friday we completed the move higher into 1998. And this will likely set up a counter trend move lower.
Let’s review a few near-term factors on the US Dollar Index:
- The Dollar Bears are non-existent
- Technical Indicators are at an extreme with regards to bullish levels and have bearish divergence
- A counter-trend move is imminent
US Dollar Index Monthly Chart (click chart to enlarge)
Thanks for reading.
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No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
