The US Dollar is Ready to Breakout

The US Dollar is Ready to Breakout. With QE2 over we no longer see daily dollar weakness. In fact, over the past 2 months we have seen the dollar stabilize and develop a nice bottoming base. Now it is on the verge of a major breakout, which will not only effect the equity markets but also commodities. I believe commodities will see more pressure than the equity markets if the dollar does truly breakout.

I like using Dollar Index Futures because that is the purest way of not only avoiding contango issues with ETFs like the $UUP but the futures also show overnight action the index does not.

The Charts

$DX_F – Dollar Index Futures daily

















As you can see, the dollar avoided resistance at the descending trendline and broke above. A move over 76.50 can see some upside momentum. The first target would be ~$79-$79.10. However, I believe it has potential to make a run all the way to ~$81.50. Remember, previous support is NOT resistance until it proves it. So it can easily blast through ~$79.05 and get to the 2nd target of ~$81.50. I don’t want to get too ahead of myself but there is a lot of “free air” above $81.50.


$DX_F – Dollar Index Futures 5hour chart
















Here is a more zoomed in picture of the $DX_F. As you can see it is putting in a possible ascending triangle reversal pattern. Typically that pattern is a bullish continuation pattern but I won’t discount its relevance here. The dollar was defended at $73.00 and bottomed out right there. It has since made 2 higher lows. A breakout and HOLD above 76.50 can see some nice upside momentum. Remember, there are still lots of people short the dollar even though they might not publicly say it.

If you have been following the Stocktwits blogoshpere, this  dollar strength should not have surpised you.

The Dollar is Basing

The Dollar and QE

 It’s still all about the “USDollar dolla’ bills ya’ll! by @Gtotoy

EURUSD at a critical juncture by @peterlbrandt




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.

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