U.S. Dollar Testing Resistance

The US Dollar index has made a nice comeback after its free-fall from late November to mid December. The Dollar is up 6.76% from its low on December 17th, but as shown in the chart below, it is bumping up against key resistance at its 50-day moving average. If the Dollar is able to break above its 50-day, a resumption of its multi-month uptrend will be solidified. If it fails to break through, however, the current level will be one peak of a newly formed downtrend.

click to enlarge

Comments

[John Polomny:]

I am not a technician but this looks like a retest of a breakdown from a head and shoulders pattern. If the index is unable to clear 86 for a few days and soon then I agree that the dollar will continue lower.

Jan 14 11:03 AM

[Bad Dog:]

This kind of "technical analysis" always leaves me smiling. The analysis suggests that. if the dollar goes up above the 50 DMA, then it may stay high unless it doesn't. But if it drops away, it will probably go down further unless it decides to rebound. Perhaps reading tea-leaves might be more instructive?

Jan 14 01:32 PM

[.*.:]

Bad Dog, you just don't understand....unless the dollar hits rebound head and shoulders resistance, it will have retest flexibility, unless it sees a double top (or botom)....on the other hand, if the 50-day moving average and 100 day moving average converge, it means the dollar is rangebound between them, and will stay rangebound, until its movement causes a divergence of the aforesaid 50 day and 100 day moving averages. Once this occurs, it will begin to retest the upper or lower range of the previous range, until it breaks through, either up or down. Get it?

Jan 14 02:04 PM

[Conan the B...:]

Either you believe in the charting process or you don't.

the simple short term H&S fulfilled its downward measured move.

As far as I'm concerned: this was just the first upleg in a USD contratrend rally.( a cyclical bull within a secular bear, rally)

It isn't over.

Jan 15 10:24 AM