I still like the US Dollar

• Posted by Greg Harmon
• on October 1st, 2015

The monthly chart above suggests to me in a lot of ways that the US Dollar still has a long way to run higher. It has tended to run in 7 year cycles and this one is just getting started. I have talked about the move out of the symmetrical triangle and stall at a 50% retracement of the leg lower from 2002 to 2008 before, and why these do not deter me. But what has changed?

Not a lot really but what has makes the timing right for a break out to happen soon. First the consolidation has been tightening since February. It is now a very tight range, this is an alert for action. Second, the momentum indicator RSI has worked off the overbought condition. Looking below now at the weekly chart that momentum indicator is refusing to move below the mid line, remaining bullish.

The other momentum indicator, the MACD, has reset almost all the way to zero. The price has also settled long enough that the 50 week SMA has come back into contact with it. But you need to move to the daily chart to see the reasons to pay attention now.

This shows a descending triangle with price tightening into the apex. But it also shows the RSI pushing over the mid line and making a higher high. It is not turning back yet either. The MACD is rising as well and just crossing to positive. Note that the bottom of the triangle is only a 38.2% retracement of the leg higher from October last year, showing strength. All of its SMA’s have caught up to price now and the price made a higher high last week.

there are two things to watch for and they come from the daily chart. The first is another higher high, over 96.80. This could happen today as it is moving up out of a higher low. The second is a cross of the triangle over the 97.35 area. These would seal the deal for a continuation higher.

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