The dollar is testing my patience.

I’ve been bearish on the buck since June. Back then, the chart of the U.S. Dollar Index (USD) looked like it had peaked. The chart had formed a “double top” pattern – which is often viewed as bearish. And several momentum indicators were showing negative divergence – which is also potentially bearish.

The USD closed last Friday near 95. That’s basically where it was in June when I turned bearish on the buck. That’s also where the USD was two weeks ago when I reiterated my bearish stance.

Today, even though the buck is still trading near its highest level of the year, I still think it sports one of the most bearish charts in the market.

Take a look at this updated chart of the USD…

First of all, take a look at what happened last November and December. The red circles on the chart show how, after a respectable rally, the dollar broke down below its 50-day moving average line (the blue line) and entered an intermediate term decline phase that lasted for a few months.

The first break below the 50-day MA in November found support. USD then rallied back up to challenge the 50-day MA – now as resistance. Resistance held, and the buck sold off hard.

Notice also how the 9-day exponential moving average (the red line) dropped below the 50-day MA. This “bearish cross” often coincides with the start of an intermediate-term decline.

Now, look at the recent action on the chart.

The red arrows point to the two recent breaks of the 50-day MA. This looks quite similar to the action last November and December.

Notice also how the 9-day EMA just completed a bearish crossover below the 50-day MA late last week.

If this chart continues to play out as it did last December, then the buck may be headed for a sharp decline – starting just about any day.

Granted, I’ve been writing bearish comments about the dollar since June. And, so far, the buck hasn’t gone anywhere.

But I’m sticking with my bearish dollar position. The chart still looks poised to break down – soon.

Best regards and good trading,

Jeff Clark

P.S. I just wrapped up the details on my presentation for the first annual Legacy Investment Summit. It’s tentatively called “Best Strategies To Profit From As Stocks Fall”… and it’ll show you the most profitable way to take advantage of the downturn I see coming.

But aside from the panels and Q&As, anyone who joins us in Bermuda will have a direct line to the best ideas in our business – over a cocktail, a poker game… or both.

Click here for more details on the Legacy Investment Summit. I look forward to seeing you there.

Reader Mailbag

Today, a dedicated reader keeps track of Jeff’s summer S&P projection…

I’m looking at my ES Futures chart where I keep the pivot points and volume/trade data, and right there is a green line I put on the chart on 3/28/18 that is labeled “JCT: Summer Target = $2870”. The close on 3/28 was 2608. We closed above 2870 on 8/24/18. Way to go!

– Mark

Where will the S&P be on 12/31/18? Higher… or lower?

Let us know your thoughts, and plans, right here.