In my
last look at the Dollar Index, I stated: "The trend is still down, and
the technicals would suggest that we will be visiting the all time lows last
seen in 2008 at some point in the near future. At that point, I surmise things
will start to get interesting."
Things are playing out as expected as we can see from the weekly chart of
the Dollar Index shown in figure 1. Closes below the lows of the red positive
divergence bars have lead to an acceleration of prices lower as those traders
who were long and expecting a reversal close their losing positions. This is
what has happened at points 1 and 2 on the chart.
Figure 1. Dollar Index/ weekly
At point 3, prices have essentially "fallen out of bed". The bounce has failed
and support has failed and prices have just simply rolled over. I would expect
another acceleration lower as all buyers simply give up, but there won't likely
be grave concern until the 2008 lows are taken out.
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