Technician’s Edge: Key Trendline Breaks in US Dollar Index

Dec 10, 2009: 5:17 PM CST

Today’s article for the  Technician’s Edge  column at GreenFaucet.com is on the recent early Trendline Breaks on the US Dollar Index.

I highlight the positive reversal breaks in the 50 day EMA, along with a short-term and long-term break which could have short-term… or even major implications going forward.

Here’s a chart of those trendline breaks:


(Click for full-size chart)

At a minimum, this argues for a short-term retracement up perhaps akin to the positive move that spanned from $82.50 to $87.00 in late March 2009.

These trendline breaks could argue, however, for a trend reversal which needs to be confirmed by price forming a higher swing low and then rising from that position of strength.

A positive trend reversal in the US Dollar Index would argue for a negative trend reversal in both Gold and Crude Oil and – if the inverse link with stocks continues – would also be bearish for stocks.

I also highlight the lengthy positive momentum divergences and show an Andrew’s Pitchfork Grid.

The quick conclusion is to watch this break very closely for any further signs of upside strength.  The nascent bullish break would be invalidated by any sudden move back down under these trendlines … which would be under the $75.00 index level.

See my new “Technician’s Edge” column article for the full post!

Corey Rosenbloom, CMT
Follow Corey on Twitter:  http://twitter.com/afraidtotrade

3 Comments

3 Responses to “Technician’s Edge: Key Trendline Breaks in US Dollar Index”

  1. Bob Says:

    This turn of events seems most significant. The completion of a fifth of fifth wave structure coinciding with a dominant trendline break. Hmmm.

    The 50 EMA is now acting as support, but often price will retrace down retest the old trend line(s) before a more substantial rally gains traction. These trendlines add two more clear levels of support which price may bounce off if a retracement down occurs.

    It's worth watching this closely; almost everything is tied to the US Dollar and moving in concert of late.

  2. Bob Says:

    This turn of events seems most significant. The completion of a fifth of fifth wave structure (http://blog.afraidtotrade.com/bullish-elliott-w…)
    coinciding with a dominant trendline break. Hmmm. Might be interesting to consider how the Andrews Pitchfork grid is playing out too… (http://blog.afraidtotrade.com/andrews-pitchfork…)

    The 50 EMA is now acting as support, but often price will retrace down retest the old trend line(s) before a more substantial rally gains traction. These trendlines add two more clear levels of support which price may bounce off if a retracement down occurs.

    It's worth watching this closely; almost everything is tied to the US Dollar and moving in concert of late.

  3. Hewison Updates us with Videos of the Dollar, Gold, and Crude Dec 17 | Penny Stock Trading System Blog Says:

    […] Gold Prices Hint at Correction A Look at Gold Prices Year to Date in 2009 Key Trendline Breaks in US Dollar Index Broken Andrews Pitchfork Grid on Crude […]