Epic Dollar Rally, Well Maybe Not Epic

• Posted by Greg Harmon
• on October 7th, 2016

Remember those crazy contests in the 60’s? Set someone lose in a bank vault and have them run out with all the dollar bills they can carry? That was an epic dollar run. It has been kind of like that in the US Dollar the last few days as well. An epic dollar run to the to the upside. Until you put it in perspective.

That contest winner went into the vault with dreams of grabbing a million dollars. But he came out with maybe a thousand singles. It will pay some bills but hardly what he dreamed about. And the rally in the US Dollar Index is similar. It is rising out of a short term consolidation in an ascending triangle. And the pattern break suggest a target move to 98.50. A strong move for a short period of time.

But the longer view puts that in perspective. Since moving higher from a base near 80 up to 100 in early 2015, it has been stuck in a range. The Dollar Index has been trapped between 93 and 100 for nearly 2 years now. This epic rally of the last few days in that context is just a move up to the middle of the range. And it is out of its Bollinger Bands® and nearing overbought territory. Keep an eye on it, as it is moving, but it is hardly an epic move for now.

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