Bears Could Be Prowling the U.S. Dollar Again
The U.S. Dollar has been stabilizing all year, but now the bears may be returning to their old hunting ground.
Several features have appeared on the greenback’s chart, and none of them are bullish.
First, consider the rising trendline running from the low of January 6 through April 29. Notice how DXY broke under it on May 7 and then failed to return above it the following week. That’s looking like a bear-flag breakdown.
Next you have the series of lower highs (white arrows) on September 25, November 4 and March 31. The final peak also coincided with a test and failure of the 200-day simple moving average (SMA).
Speaking of moving averages, the 50day SMA attempted to pass back above the 200-day SMA earlier in May. Now it’s fading -- the exact mirror opposite of the price action in silver.
Finally, notice the relationship between DXY’s 21-day exponential moving average (EMA) and 50-day SMA. Crosses between these two lines (gold arrows) signaled periods of stability in late September and early February. They were also red meat for the bears last May and in early November. Another cross downward occurred three weeks ago, creating potential for more downside.
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Several features have appeared on the greenback’s chart, and none of them are bullish.
First, consider the rising trendline running from the low of January 6 through April 29. Notice how DXY broke under it on May 7 and then failed to return above it the following week. That’s looking like a bear-flag breakdown.
Next you have the series of lower highs (white arrows) on September 25, November 4 and March 31. The final peak also coincided with a test and failure of the 200-day simple moving average (SMA).
Speaking of moving averages, the 50day SMA attempted to pass back above the 200-day SMA earlier in May. Now it’s fading -- the exact mirror opposite of the price action in silver.
Finally, notice the relationship between DXY’s 21-day exponential moving average (EMA) and 50-day SMA. Crosses between these two lines (gold arrows) signaled periods of stability in late September and early February. They were also red meat for the bears last May and in early November. Another cross downward occurred three weeks ago, creating potential for more downside.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
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