Decision Time For The US Dollar
- Posted by TheArmoTrader
- on March 31st, 2012
We’ve seen a decent disconnect between the dollar and the US Stock Market. Traditionally (at least in the last 3-4 years), the dollar has been inversely correlated with the market. The market would go up and the dollar would go down. However, with the mess in Europe (along with the possible slowing in China), there has been some disconnect between that relationship.
However, the dollar is getting to a big inflection point, one that can light a little fire for risk assets.
Below is the chart of the US Dollar Index ($USDX). You can see there has been a decent channel that has been established since mid-last year. After failing to make another high and getting denied at $81, there is a good probability that the Dollar breaks below the channel and sees some technical damage. The wick at $81 gives me caution. A break below could spark another leg up in the market and give some support to commodities, which have been really weakening as of late.
US Dollar Index ($USDX) – Weekly Chart
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Jerry Khachoyan is currently an undergraduate student at UCLA pursuing a degree in Political Science. He started trading in September of 2008. He concentrates on using technical analysis and reading the tape to enter the best risk/reward trades. The stock market to him is one of the greatest inventions by man.
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