In looking at the following 1-year chart for the dollar index we should keep in mind that it doesn’t mean that the dollar is intrinsically strong, it just means that going forward it is likely to outperform many other currencies, in other words it’s the best of a bad bunch. As we know all fiat is fast trending in the direction of utter worthlessness.
On this 1-year chart we can see that the dollar index has formed a potential base pattern, a Double Bottom, and it looks like it is readying to break out of it with a small bull Pennant forming above its 50-day moving average and an advance from here could quite soon lead to a bullish cross of the moving averages…
The chart for the dollar proxy Invesco DB US Dollar Index Bullish Fund (UUP), which we are looking at because it includes volume and the Accumulation line, also looks positive, with in this case a large neat Head-and-Shoulders bottom having formed since April that has been accompanied by an overall positive Accumulation line. It looks poised to break out upside from this pattern soon with a small bull Pennant having formed above its now rising 50-day moving average, and in this it will be supported by its now positive momentum (MACD) and this of course parallels what we are seeing on the dollar index chart.
The reasons why the dollar might rally soon are a matter of conjecture, but the charts strongly suggest it will. Perhaps it will be because of a sudden market panic engendered by massive food riots across the US due to food stamps being halted from November 1st as a result of the Budget gridlock, with widespread looting and property destruction, which seems to have been anticipated by the Administration - hence the military getting on-the-job Martial Law training in recent weeks in places like Chicago.
End of article.
Posted at 8.15 am EDT on 28th October 25.