Technical analyst Gary Savage brings us his charts of the day, which today focus on the suddenly bearish action in the U.S. dollar, and gives us an idea of when the sell-off could come to an end.
The dollar is now 4 days into its final bloodbath phase. This phase usually lasts 5-7 days. We should get a bottom this week, followed by a multi-month rally.
As you can see below, once the support line around the $98.50 level broke, the bloodbath phase began in earnest.
Potential targets for the bottom in the U.S dollar could be either the election night low of $96, or the 38% Fibonacci retracement. It’s also possible the dollar is discounting an event, and when it occurs, we’ll get a “buy on the news” type of reaction, even though the event will be dollar negative.
On the ETF side of things, the PowerShares DB US Dollar Index Bullish (NYSE:UUP) fell $0.04 (-0.16%) in premarket trading Monday. Year-to-date, UUP has declined -5.33%, versus a 6.82% rise in the benchmark S&P 500 index during the same period.
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