3 Charts That Point To Exhaustion For Dollar Rally

The U.S. Dollar Index has been on a tear since last year, rising nearly 21 percent since the rally began. I recall speaking to many technicians and market participants that were fighting the strength just as the dollar rally was getting started back in the 3re quarter of 2014. I personally think we may be in the beginning stages of a larger dollar rally but some of the indicators and charts that I’m following are depicting a possible correction/resting period for this monster move.

The first chart is the spread between current price and the 50 week moving average. As you can see, this spread is reaching a pretty extreme level, likely limiting near-term upside.  (click charts to enlarge)

US Dollar Index 15 Year Chart – Is The Dollar Rally Nearing Exhaustion?

us dollar rally_15 year chart

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Also looking at the EUR/USD, the chart shows a similar picture. The Euro recently reached some very oversold levels (check out the Moving Average spread indicator).


EURUSD dollar rally analysis january 2015


Lastly, let’s return to the U.S. Dollar Index again. When looking at the chart below, it’s interesting to see how many dollar rallies stalled out in the 20-30% range. Also, the 20 week ROC (Rate of Change) is beginning to look extended. The chart below dates back to the 1980’s for greater perspective and reference.

US Dollar Chart 1980-2015

dollar rally fibonacci levels chart 1980-2015


It’s safe to say that the dollar rally is looking a little extended. It may be time for a rest after this massive run up.

Thanks and trade safe.

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Twitter:  @stockpickexpert

No position in any of the securities mentioned 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.