CLICK ON CHART TO ENLARGE

Were any of you surprised that during the recent stock market decline, the Dollar didn’t rally?  Surprised me!!! 

When events take place that are positive for an asset and it doesn’t move higher, often times that is a sign that if support breaks, sizeable weakness will take place.

Line (1) remains stiff falling resistance for almost a year.  With the Dollar not moving higher during the recent stock market decline, what will the Dollar do if equities rally?  Line (2) is being tested today on this weekly chart as support.  Odds favor that if line (2) is broken to the downside, equities and risk trade assets will like it!

An imperfect “flag/pennant” pattern looks to be forming on this chart….remember a flag/pennant doesn’t tips its hat per direction, yet it does suggest a big move will take place after the breakout/breakdown.  The Dollar has been boring of late….the flag/pennant suggests the boredom is about to end!