U.S. Dollar Index Shows Strong Divergence Pattern
November 19th, 2008WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
There’s potential for a sharp move lower on the dollar in the near term. Indicator trends should be moving with the index trend, but the trends on the indicators have turned down. The shooting star-type candle is more evidence that we’re seeing divergence.
Dollar holders: Watch out.
I’ve reduced my dollar holdings (again) by going back into DBA for now.
In case you didn’t catch it the first few hundred times I’ve made this point: The commodities move opposite to the dollar. So, if we get a break in the dollar… The oil chart will really have my attention.
U.S. Dollar Index, daily interval
Of course, this analysis is invalidated if the USDX moves over 88.
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What do you make of the massive volatility earlier today? It sunk a whole point in an hour, then made it all back up in roughly the same period (of course, making it up is what they do).
I try not to make up too many theories to explain volatility. I try to pick a direction at key levels. Either I’m right or I’m wrong.
If it goes over 88 (88.14 to be exact), I was wrong.