Figure 1 is a weekly chart of the Dollar Index (symbol: $DXY), and it is the
same chart I have been showing for weeks. Not surprisingly, this week's break
above the downsloping trend line coincides with weakness in equities. The 74.62
key pivot becomes our new level of support.
Figure 1. $DXY/ weekly
The price action for the Dollar has been constructive from the bottoming
process to the recent
consolidation. But resistance is looming overhead, and it is rather significant
suggesting that a break above these levels would deal a crushing blow to
equities, which seem to trade in the opposite direction of the Dollar Index.
This resistance can be seen in figure 2, a weekly chart of the Dollar Index,
and it is defined by the following hurdles: 1) the 40 week moving average;
2) the key pivot at 76.28; 3) the up sloping orange trendline, which represents
the prior breakdown point.
Figure 2. $DXY/ weekly
In sum, the price action in the Dollar Index is very constructive. Resistance
remains significant and a break above would likely coincide with equity weakness.
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