• 317 days Could Crypto Overtake Traditional Investment?
  • 322 days Americans Still Quitting Jobs At Record Pace
  • 324 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 327 days Is The Dollar Too Strong?
  • 327 days Big Tech Disappoints Investors on Earnings Calls
  • 328 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 330 days China Is Quietly Trying To Distance Itself From Russia
  • 330 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 334 days Crypto Investors Won Big In 2021
  • 334 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 335 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 337 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 338 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 341 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 342 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 342 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 344 days Are NFTs About To Take Over Gaming?
  • 345 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 348 days What’s Causing Inflation In The United States?
  • 349 days Intel Joins Russian Exodus as Chip Shortage Digs In
How Millennials Are Reshaping Real Estate

How Millennials Are Reshaping Real Estate

The real estate market is…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

  1. Home
  2. Markets
  3. Other

Dollar Index: Bullish

The last time I looked at the Dollar Index was on September 2, 2011, and I made the statement: "The Dollar Index is making an attempt to close above the nearby key pivot level at 74.62. A weekly close above this resistance level would likely turn the trend from down to up." Not only is the Dollar trading at 78.5 (~5% over the key pivot level), it is also above its simple 10 month moving average. This is bullish.

A simple strategy, utilizing monthly charts of the Dollar Index, is to buy the Dollar on a monthly close greater than its simple 10 month moving average. My sell signal is the presence of a negative divergence between price and an oscillator that measures price momentum or a close back below the simple 10 month moving average. Now the purpose of this study is not to derive a Dollar trading strategy or to show you how wonderful I am. The purpose is to define those times that the Dollar index is in an uptrend.

Since 1979, this strategy generated 22 trades, and as it turns out the trades were evenly distributed over the last 3 decades with about 7 trades occurring in the 1980's, 1990's and 2000's. 68% of the trades were winners, and the average trade lasted 7 months. Such a strategy yielded 79 Dollar Index points while buy and hold netted negative 10. This strategy produced the following equity curve.

Figure 1. Equity Curve
Equity Curve

This equity curve and strategy defines those times when we should expect the Dollar Index to rise. A close over the simple 10 month moving average is bullish for the Dollar Index.

In the next articles, I will look at how gold and equities have performed over the past 10 years when the Dollar is in a bullish trend.


Back to homepage

Leave a comment

Leave a comment