A lot of eyes are on the U.S. Dollar now. Questions abound as our Treasury Department is having difficulty luring foreign countries to buy our bonds. Difficulty, as we print too much money with too little progress on deficit spending.
The past three years were one where the Dollar bounced up and down within the converging of two long term support/resistance lines (see the upper and lower blue lines today’s chart below).
As many know, March has been a testing time for the Dollar’s lower support. But, that lower support has been broken, so the pattern now has to defer to the next support level unless the S.T. Accelerator can make it above the trading range depicted by the red boxed in area.
The Dollar closed at 76.33 yesterday, and its next support level is at 74.21. Some are wondering why the Dollar is falling slowly and not seeing huge down days. If you look at the C-RSI Strength reading, you can see two things: 1.) That the strength is in negative territory, and … 2.) That it is also showing a Positive Divergence.
That Positive Divergence on the Strength can act as a “braking mechanism” as the Dollar falls toward its 74.21 support.
Should you worry about the Dollar now? It broke a support, so you should be concerned. But, I would save the worry until the Dollar has a run-in-test with the 74.21 level … if it does. If the Dollar falls below that level, then I would say to worry.
What to watch for now: The Dollar is trying to base for a platform to move higher from. The positive for that case is coming from a positive C-RSI divergence. However, a positive divergence by itself will not be enough for another up move right now. What will be needed, is for the S.T. Accelerator to move up above the trading range shown below in the red box. Without the ability to accelerate, your car will go nowhere, and neither will the Dollar.