The dollar broke out of a two month descending channel earlier this month. Interestingly, in a show of strength, it broke out of this channel with a bounce off MA(200). Of course, there was the now common break of MA(200) for a couple of days, probably to run over some stops lying just below MA(200). The dollar consolidated nicely since that breakout and held the MA(20), before finally making a relatively big move up on Friday. So far, so good. But what makes things interesting now, and the reason why I decided to do this post, is the presence of MA(50) directly overhead. This presents the first big challenge to this uptrend in the dollar since its breakout earlier this month.
To provide another perspective, here is a weekly chart of the dollar heading back almost to the beginning of the millennium.
We are right in the middle of a two year ascending triangle. The dollar bounced right off the weekly MA(50) and MA(200) this week and a bullish crossover of the two averages is imminent. Are we in for a move upwards to the resistance level? If yes, this move would not bode well for the overall markets.
For an analysis of all the market sectors, click here. And here is the link for the best and the worst performing industry groups.
Take care and good luck!