Don't Ignore This Chart!

Dollar's Cup With Handle Appears Complete

Tom Bowley

Tom Bowley

Chief Market Strategist, EarningsBeats.com

The U.S. Dollar index ($USD) saw a parabolic rise from mid-2014 through March 2015 and has been consolidating since in a classic cup with handle pattern.  The pattern doesn't confirm until we see a breakout, but there's a Federal Reserve meeting next week that could trigger buying in the greenback once again.  The following chart illustrates that nine month uptrend and a couple key tests along the rising 50 day SMA prior to the right side of the cup taking shape.  The ensuing weakness and test of the rising 20 week EMA has provided the handle.  Take a look:

On the USD daily chart (not shown), a negative divergence printed in late November and suggested the dollar would pull back for a period of time.  That allowed the handle to form on this weekly chart and now the dollar awaits a trigger to break out above cup resistance near 101.00.

Happy trading!

Tom

Tom Bowley
About the author: is the Chief Market Strategist of EarningsBeats.com, a company providing a research and educational platform for both investment professionals and individual investors. Tom writes a comprehensive Daily Market Report (DMR), providing guidance to EB.com members every day that the stock market is open. Tom has contributed technical expertise here at StockCharts.com since 2006 and has a fundamental background in public accounting as well, blending a unique skill set to approach the U.S. stock market. Learn More