Below is a review of the U.S. Dollar Index apply Edson Gould’s Upside Speed Resistance Lines.
Below is a chart of the Index with Edson Gould’s Upside Speed Resistance Lines.
Upside Resistance Lines
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118.03
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133.90
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149.31
Observations
This chart is very compelling because it spans the entire secular period of declining rates. Although the lines on the chart do not touch the 1980 period, they are constructed as a reaction from the rise that takes place from 1980 low to the 1985 peak.
Currently, the Index is meeting the descending upside resistance lines at 118.03 and has struggle at this level since November 2016. Just think of it. It takes 5 years for this trend to battle the upside resistance lines and it still hasn’t been resolved. This could take a while.
If the Index can exceed the 103.21 level, the Index will likely achieve 118.03 and make a move to the descending upside speed resistance lines at 133.90. Once the 133.90 level is approached, the 118.03 level will become the downside support.
Caveat
One concern that we have is for the Index to repeat the magnitude of increase of the previous cycle. In this case, if we look at the period from September 1992 to July 2001, the Index increases +54.35%. If the Index were to increase in the same amount from the April 2008 low, the Index would top out at 110.10. It is important to be aware of this level and we would be encouraged if the 110.10 can be exceeded with exceptional strength.