What Does Technical Analysis Tell us about the US Dollar?

One look at the US Dollar in July 2017, and you just felt sick.

Unless, of course, you were short the currency or held gold at the time. 

But for those with hopes for a near-term recovery in July 2017, it was best to just find somewhere else to park an investment. 

Then again, you were safer getting out of the dollar, as early as late May 2017. 

In May, the dollar had just broken through the lower support line of a falling wedge pattern at 98 and never looked back.  Then after failing to hold its consolidation pattern at 96.97, it plunged even more, this time to a July low of 94.90 – which marked double bottom support dating back to September 2016. 

Should that support fail there was an opportunity for a test of August 2016 support at 94.


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Even with relative strength (RSI), MACD and Williams’ %R indicating an oversold condition at the time, touching the dollar in free fall just wasn’t a good move.  Plus, any upside move would most likely be short-lived.

Worse, with the EUR-USD powering higher at 1.148, bulls were beginning to give up any hope for near-term reversal, as well.  They had to accept that the dollar was in a sustained period of weakness, with no real hopes for sustained upside.  

Then again, there wasn’t much that could be done at the time for the dollar, especially with the Federal Reserve cautioning on interest rates, concerns over weak U.S. inflation, and opposition to replace Obama Care in July 2017.

Oddly enough, days before all of that came to light, strategists began to argue that the dollar could be ready to break out and move higher.  In fact, some had expected for the dollar to balloon to 100, as the year progressed, revering much of the decline.

But, according to an analyst at Brown Brothers Harriman, as quoted by CNBC, “I think there was a window of opportunity.  The window is shut because of our poor data.”

Gold bulls didn’t seem to mind the steep decline in the currency, though.

Further weakness fueled a July 2017 rally in the metal from a low of $1,205 to $1,233.

As of July 2017, it was best just to avoid the dollar, and buy gold.


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