The U.S. Dollar index ($USD) saw a parabolic rise from mid-2014 through March 2015 and has been consolidating since in a classic cup with handle pattern. The pattern doesn't confirm until we see a breakout, but there's a Federal Reserve meeting next week that could trigger buying in the greenback once again. The following chart illustrates that nine month uptrend and a couple key tests along the rising 50 day SMA prior to the right side of the cup taking shape. The ensuing weakness and test of the rising 20 week EMA has provided the handle. Take a look:
On the USD daily chart (not shown), a negative divergence printed in late November and suggested the dollar would pull back for a period of time. That allowed the handle to form on this weekly chart and now the dollar awaits a trigger to break out above cup resistance near 101.00.
Happy trading!
Tom
