If you haven’t already learned, the financial markets can change on a dime. Trends and themes are good until they are not.
This is why we use technical analysis to alert us when price is reversing or at risk of reversing.
Today we turn out attention to the US Dollar index. As many of you are aware, King Dollar has been very strong for much of the past two years. BUT, as we mentioned above, things can turn quickly in the financial markets if you aren’t tuned in. AND, as we have seen over the past two months, the U.S. Dollar has slid 10 percent.
We can see this on today’s long-term “monthly” chart of the greenback. And this turn lower comes after reaching elevated momentum levels.
More important, though, is that King Dollar is testing a very important support level at (1). This support acted as stiff resistance (see red arrows) while the Dollar traded in a sideways channel for years.
So for the first time in history, King Dollar is testing the top of this trading range as support.
With momentum still this high, a move below support at (1) could see another 10 percent drop. If it happens, it would be hard on the Dollar but GREAT for precious metals! Stay tuned!
This article was first written for See It Markets.com. To see the original post CLICK HERE.
