U.S. Dollar Threatens Reversal

The U.S. Dollar Index could re-enter the triangle pattern. It spiked above durng the March panic and went below in July. The level I'm looking for is 96. Above that line, it will clear the 6-year moving average. It has already broken above its 7-year moving average, but the 6-year is the entirety of the bull market. The 5-year moving average is slightly above 96 on the DXY. Why this matters: the U.S. Dollar Index broke through its 6-year moving like a hot knife through butter in 1986 and 2002. Both came after the beginning of USD bear markets and the greenback would tumble relentlessly for another 18 months and 2 years, respectively. A bounce and continuation of the break would leave open the possibility that the dollar peaked in March 2020 and will not make an initial bottom until sometime around late 2021 or 2022.

If instead the dollar reverses, there's no precedent. Looking over the history, the most likely analog is the 1997-1999 consolidation. Back then, the dollar made a higher low in October 1999. The current bull market (if extant) made a higher low in August 2020. It did not breach its moving average back then, however. Another difference is this one is much larger in time, 5 years into a pattern versus 2 years. At minimum, the dollar would be expected to run for another 2-plus years or go much higher than expected.

Finally, if this is an analog, the Fibonacci retracements are similar.

I have made comparisons between the current stock market and the late 1990s.

September 2018: It's 1998

At the low in 2018: What a Tantrum, Is 1998 in Play?

March 2020: About That 1998 Analog and Y2K Scenario

April 2020: 1998 Again: The Greatest Bubble in History

Most recently looking at a similarity between Nasdaq 3/2000 and Nasdaq 9/2020: Nasdaq Reversion Getting Mean