Don't Ignore This Chart!

Dollar's Cup With Handle Appears Complete


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!


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Tom Bowley
About the author: co-founded Invested Central in 2004 and served as the site's Chief Market Strategist for more than 10 years. Invested Central provides stock market education and guidance for those interested in making their own financial decisions. During his tenure at Invested Central, Tom co-hosted Market Open LIVE, a national radio broadcast that covered many of the largest markets across the U.S. In addition, he has spoken at various conferences throughout the United States and Canada and has taught thousands of traders across the globe how to trade equities more wisely with an emphasis on managing risk and intermarket relationships. Learn More
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