Is it time for the dollar index to rally?

Posted on by The INO.com Team

The dollar index, which put in a strong performance in the first six months of the year, pulled back from its recent highs and appears to be in defensive mode.

If you are not familiar with the US dollar index (USDX), it is an index, or measure, of the value of the United States dollar relative to a basket of foreign currencies.

Its weighted geometric mean of the dollar's value is compared with these currencies in the following percentages:
* Euro (EUR), 57.6% weight
*Japanese Yen (JPY), 13.6% weight

* Pound sterling (GBP), 11.9% weight
* Canadian dollar (CAD), 9.1% weight
* Swedish krona (SEK), 4.2% weight
* Swiss franc (CHF) 3.6% weight

In this short educational video, I point out what we see in the dollar index and the reason why we think a potential rally may be in the foreseeable future.

As always our videos are free to watch and there is no need for registration.

If you'd like to make a comment on this or any of our videos, please go to the Trader's Blog and let us know your thoughts.

All the best,

Adam Hewison
President of INO.com
Co-founder of MarketClub

14 thoughts on “Is it time for the dollar index to rally?”

  1. US Dollar has no legs to stand on! Down she goes cause that's where she belongs! Euro no longer can be used as the cover up! But who knows the spin masters always find a new way to put on a new spin! The fact is Gold has no other place to go but up (currency of choice.)
    And Robert Lipton comment is the home run!

  3. Why wouldn't you start your Fibinaci line at 12/1/09 to 6/6/10? I don't understand the reasoning for starting in April. This would predict a larger downtrend for the dollar yet to come.

  4. This was an interesting post, although I have a somewhat contrarian view.
    In nutshell, is the dollar being driven by factors that drive the doilar OR by factors that impact other currencies. Technically, many may think that moot but not so fast... I don't think that's a distiction without a difference, depending on your time invesing horizen.
    IMHO dollar strength has been driven by weakness in the Euro, NOT by underlying strength in the US$. As we see better comfort in the position of the Euro -- which admittaedly is volatile -- I'm not sure I see the dollar rising. At least in the perspective of the weekly and monthly triangles. If you are trading daily, maybe different.
    I see these currency movements as an opportunity to invest in broad-based nation or region based ETFs depending on the currency flow.
    Not sure I look for secular strength in the US$ fwd; having been done over royally by the Australians and their super profit tax debacle, I place greater strength in the Loonie these days.
    R/Anthony

    1. Anthony,

      I don't disagree with your assessment. As I mentioned in the video you're looking for a turn only when our triangles kick in.

      Adam

  5. Your videos are awesome. I think we will get a big bounce on the dollar and the Euro will start going down, down and down!!!!

  6. The dollar index seems to have bounced off the 61.8 % retracement level of about 83.34....

  8. Hi Adam...Wondering if I can get your thoughts. I used the TT's for trading currencies and got positive results. The problem is, I tend to be an intermediate term trader on everything. I've had great success with stocks and ETF's. On currencies, however, I put up $5000 and made only $86 before getting stopped out as per the TT's. I was using 10:1 leverage because of my longer time horizon.

    What leverage and time horizon is appropriate when using the weekly (trend) and daily (timing) TT's to realize a decent profit on capital at risk? I suspect there is a reason most sites default to 100:1 and minute charts, but I just want to confirm if it's possible for traders like myself who don't have time to stare at a screen for hours on end to succeed (substantially) in forex.

    Thanks for your thoughts.

    Regards.

    1. DG,

      I might suggest if you are an intermediate trader that you look at the monthly weekly triangles instead of the weekly daily triangles which tend to be shorter term. I would use the monthly for the trend and the weekly triangles for timing.

      All the best,
      Adam

  9. ADAM,

    YES. DOLLAR IS BOUNCE UP LITTLE BIT THROUGH END NEXT WEEK; THEN,I SEE DOLLAR WILL GO DOWN AGAIN, EURO WILL HAVE NICE BOUNCE; STOCK WILL HAVE NICE BOUNCE. GOLD WILL GO DOWN ONE MORE TIME.

    THANKS.
    GEORGE

  10. Hey Loic,

    The issue with the video link has been fixed. Thanks for bringing it to our attention.

    Thanks you as always!

    Best,

    Lindsay Bittinger
    INO.com & MarketClub

  11. Bonjour Adam,

    Hope that you are doing great !! 🙂

    All is well here, I am leaving for Thailand tomorrow for a month on holidays. Will be trading from there with market club as usual but from the beach. Can't wait for that !! :-))

    Quick email because on the blog post above, there is no link to access the video as usual.

    Thanks for fixing the issue.

    Have a fantastic summer,

    Loic

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