The US Dollar remains in a bear market and when you look at the long term picture it’s leaking value like a sieve, but that’s not to say it doesn’t have mini rallies to release the oversold pressure along the way. Recent action within this giant wedge formation suggests that the dollar is attempting to put in a short term bottom, confirmed by the RSI action.

During the ’08 meltdown the dollar spiked higher, forming a double top, which also marks one of the key points of the upper trend line. In recent years, when the dollar rises, the markets either crater, or go nowhere. From Nov ’09 – Jun ’10, the dollar rallied sharply, while the major indexes essentially went nowhere. Victor Katsenelson describes this as classic sideways action where we go up…go down…but essentially end flat.

If you’re a great stock picker these can be profitable times, but for the most of us it’s time to consider scaling back your positions when/if the dollar perks up.

  • Bullish on the dollar above recent highs (around $81)
  • Bearish below lower trend line (around $76)


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