Well… that should just about do it for the bouncing dollar.
Last week, we took a look at the US Dollar Index ($USD) and concluded that the buck was so oversold it was due for a bounce. We also suggested that any rally would be temporary.
We cautioned traders who might attempt to profit from a bouncing dollar not to stay in the trade too long. It looked like the dollar had lower to go.
$USD did indeed bounce higher for a few days. But yesterday, the dollar turned back down. And it looks – to me at least – like the bounce is over.
Here’s an updated chart of $USD…
The index didn’t quite make it all the way back up to the former support line – now resistance – at 93. Now, after yesterday’s decline, it looks like the buck is headed towards the September bottom at 91.
If that level doesn’t hold – and I don’t think it will – then look out below… The next support level (not shown on this chart) is another 3% lower.
That sort of decline in the dollar should add a little more fuel to the current gold rally.
Gold is up almost $80 since mid-December. That’s right about when the dollar started its current, intermediate-term decline.
Gold and the dollar tend to move in opposite directions. So, if the dollar breaks down again, then we could see an explosive move higher in gold.
Traders should keep an eye on the $USD chart, and on the September low in particular. A close below that level should lead to more selling pressure for the dollar – and more buying pressure for gold.
Best regards and good trading,
Jeff Clark
Reader Mailbag
Today, some kind words from Delta Report members…
I wish you a Happy New Year. Thank you very much for your excellent trade alerts. I think you are making a big difference in the lives of your subscribers.
– Sitarama M.
Thanks Jeff. Nice start of the year. Made a nice profit on GE and GDX.
– Rene Z.
Happy New Year. Just wanted to give you some of my stats given that you did it for your report.
I was able to have a 35% return on invested capital for the entire year based on trading your ideas. That is pretty good for me. I did not get into every trade you provided but got to most of them. If I can do that level of ROI then obviously a happy camper!
I am a lifer with you folks and very happy with your entire approach. Your track record is amazing and your style fits me very well. Many thanks and looking forward to a great 2018. Will update my stats this time next year as well.
Many thanks!
– Terry P.
As always, feel free to send in your trading stories, questions, and suggestions right here.