Back in April this year, we wrote an article entitled “The Technical Case for a Bottom in the US Dollar.”
The premise of the piece was that the US Dollar was been putting in a base and had recently broken above a long term resistance level. The bottom line was, “It takes a while to turn the long term trajectory of the US dollar, but it looks like the start of the process.”
Here is the link to the article.
The US Dollar Index Bullish Fund (UUP) is up about 9.7% since April this year. So, what is the current status of the buck and where might it eventually be headed?
The weekly chart of the US Dollar Index shows that the basing process in April may be the head of a large inverse head and shoulders pattern. It broke above the $95 neckline resistance level in October and has continued higher.
The inverse head and shoulders formation projects an upside price objective, measured by taking the height of the pattern and adding it to the neckline.
In this case, it targets the $101.50 area.