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6/1/2018 – USD: Big Test for the Dollar (DXY)
USD Weekly Chart (DXY)
Member updates were just completed for the USD majors, gold, and SPX. The current juncture for a number of markets is significant but I wanted to share this DXY (US Dollar Index) chart with everyone. Simply put, the USD rally faces a huge test of resistance and could reverse. Parallels based off of the 2008-2011 trendline have identified major pivots in price. This week’s high is a few ticks below the red line that extends off of the 2010 high but I think it’s fair to say that ‘we’re there’. Also, EURUSD took out its November low this week but DXY did not take out its November high. This non-confirmation is typical at turns.
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USDSEK Weekly Chart (Swedish Krona)
Also, I look at USDSEK (Swedish Krona) for clues on general USD direction. USDSEK tends to lead DXY (why? I don’t know). For example, USDSEK topped on 12/16/2016 and DXY didn’t top until 1/3/2017. This year, USDSEK bottomed on 1/31 and DXY bottomed on 2/16. There is not divergence (non-confirmation) between the 2 assets at this time but keep an eye on USDSEK moving forward. Still, recent USDSEK action is worth mentioning. Price traded into the gap from April 2017 this week before pulling back sharply and the weekly close is right at the 61.8% retracement of the decline from December 2016 (it is 6/1/18 so this post needed something Fibonacci related). At minimum, it’s appropriate to say that USDSEK is testing critical resistance. I would be less inclined to entertain DXY and EURUSD reversals if this were not the case.