US Dollar Correction Over? Big Test Underway!

Chris Kimble

The U.S. Dollar Index has been mired in a correction for several months.

During that time, stocks, gold, and oil exploded higher in 2017 and early 2018.

But the greenback has put together a multi-week rally.

Is the correction nearing an end?

Looking at the chart below, you can see that the US Dollar Index has traded in a wide channel since bottoming in 2008 (1).

It tested a mid-point trend line early in 2018 (2) and reversed back higher.  It is now testing it’s downtrend resistance line (3).

See chart below.

U.S. Dollar Index Chart – Big Test!

us dollar index chart down trend resistance test important_24 may 2018

A breakout here would be constructive for Dollar bulls.  And it could set the stage for a test of the upper channel resistance (1). Some consolidation is possible here… bulls definitely would like to see a bull flag pattern develop (or an outright breakout).

However, should the Dollar reverse lower, it could set the stage for a retest of the 2018 lows.

In any event, commodity bulls/bears and asset managers should keep an eye on the Dollar in the weeks ahead!

 

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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.

 

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