US Dollar Charts: 1978-2014

We take a look at three US Dollar charts to get a better idea of where the US Dollar price has been and where it might be headed

Bullion.Directory precious metals analysis 7 October, 2014
By Terry Kinder
Investor, Technical Analyst

With the strong move up in the US Dollar there has been a lot of speculation and fear about its new found strength. Given all the buzz, now seems as good a time as any to take a look at some US Dollar charts to see what they can tell us about where the dollar has been and where it might be headed to.

We recently looked at the price of gold in relation to the US Dollar Index (DXY). It has been useful to look at a series of US Dollar charts in relation to both gold and silver since the value of the dollar often strongly influences the price of both precious metals.

Most of these US Dollar charts have been of short or medium-term perspective. However, it can also be useful to look at the US Dollar from a longer perspective because it helps us understand where important support and resistance levels have formed and this can help us understand the current price action and patterns better.

The first of our US Dollar charts covers the period from 1978 to 1998.

The arrows labeled A, B, C, and D point to times when the DXY bounced after reaching the $86.84 level.

Especially significant is B where the U.S. Dollar fell from over $160.00 in 1985 all the way to $85.33 in December of 1987.

Note the 4 very clear times labeled A, B, C and D where the dollar price bounced at the $86.84 level marked by the green line.

The second of our US Dollar charts covers the period from 1986 to 2006.

On this chart there is one additional point of interest.

At point E, the dollar can be seen finding support around the same $86.84 line after a two year decline in price.

(click images to view full size charts)

The third of our US Dollar Charts covers the period from 2002 to 2014.

This chart has quite a bit going on so we will go ahead and list the points of interest:

• E – Dollar bounces near $86.84 after a two-year decline in price;
• G – Price trigger formed by Andrews’ Pitchfork and also multi-year price resistance line dating back to 2005;
• H – Price touches resistance line and falls back. In 2010 there is also another touch of this resistance line which isn’t labeled;
• I – Price moves above resistance line on this monthly chart and reaches $86.70, only $0.14 from the $86.84 level;
• J – Price trigger for smaller Andrews’ Pitchfork on right-hand side of the chart;
• K and L – Andrews’ Pitchforks. When price exited out of the top of the upper parallel channel of the larger pitchfork a second pitchfork was created.

 

There are a few interesting things about the two pitchforks. First, price has not yet convincingly broke above the price trigger and long-term price resistance line, G.

Until it convincingly breaks through that line, any further move up in the dollar remains in doubt.

The second interesting thing is that within the pitchfork labeled L, price moved above the red median line, but then met resistance right before the $86.84 level.

If price continues to fall lower it could move back below both the red median line of the pitchfork and also below the long-term resistance line. This would be a sign of price weakness in the dollar and could be the beginning of a stronger decline.

We have also supplemented our US Dollar charts with the daily DXY.

This chart includes the following important features:

• A – Andrews’ Pitchfork;
• B – Price trigger line;
• C – Price meets resistance at the trigger line and has so far failed to move convincingly above it;
• D – MACD bearish crossover;
• E – RSI is still overbought but moving lower;
• F – KDJ bearish crossover

The US Dollar charts we have looked at highlight the movement of the DXY from 1978 to 2014. They also point out the importance that the $86.84 level has held and we can see a number of points where the price, after significant declines has found support at or near that price.

Recent price action confirms the importance of the $86.84 level as it has posed resistance to a further move higher in the DXY.

From time to time it is good to look back in time to gain perspective on where price has been and also gain insight to where it might be headed.

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