DXY fell 0.72% last week and closed at 98.01 (below the 13-dma) after printing an engulfing bearish candlestick on Friday. 14-day RSI was unable to stay above its 20-dma during the previous week’s rally and 3-day RSI remains below 80; bearish. Not surprisingly, DXY looks similar to the pattern in TNX – the interest rate on the ten-year treasury.

The March/April (and now December) highs near 100 are pivotal. Any breakout from there will be very bullish. A break of the Dec low at 97.21 generates an initial price target of 96.65.

The breakout from a triangle on the weekly chart measures a minimum move to 103.00. This should be the fifth and final leg up of the bull market. A strengthening Dollar is deflationary and bearish for equities.

Cycles tell us that the rally should continue into a final high in the first quarter of 2016. DXY is expected to then begin a bear market which will last until the second half of 2017.

Click here to get your copy of the December Lindsay Report.

Ed Carlson, author of George Lindsay and the Art of Technical Analysis, and his new book, George Lindsay's An Aid to Timing is an independent trader, consultant, and Chartered Market Technician (CMT) based in Seattle. Carlson manages the website Seattle Technical Advisors.com, where he publishes daily and weekly commentary. He spent twenty years as a stockbroker and holds an M.B.A. from Wichita State University.

© 2015 Copyright Ed Carlson - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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