Data & Technology
Research Reports
Report Solutions
Reports Library
Actionable StrategiesPricingCompanyContact
Log inLoginSign up
< BACK TO ALL REPORTS

Spring Dollar Doldrums

Jay Kaeppel
2021-03-19
The dollar has been relatively strong so far in 2021. However, several objective factors may be stacking up against the dollar in the months ahead. We detail those factors here so you can decide for yourself.

The U.S. dollar has staged a modest rally so far in early 2021. The question is whether this is the start of a new uptrend or simply a rally in a larger downtrend. A trader can see whichever they'd like to see in the chart below.

Going forward it should be noted that the dollar is about to enter a period of seasonal weakness. The chart below displays the annual seasonal trend for the dollar. Note the period of weakness from the close on Trading Day #57 through the close on Trading Day #89. 

The chart below displays the cumulative % performance for the U.S. Dollar held long ONLY during this particular 32 trading day period every year since 1971.

We can make two observations:

  • It is not a pretty picture
  • However, it is also NOT a "sure thing, the dollar is for certain going down" situation

The chart below displays year-by-year percentage returns for the dollar during this period.

The table below also highlights the slight but steady downside bias.

This seasonally unfavorable period this year extends from the close on March 23rd through the close on May 7th.

One other potential factor involves US Dollar Optix.  Conventional wisdom assumes that high Optix reading are "bearish" and low Optix readings are "bullish." But in some cases a reversal of sentiment can be important.  The chart below displays those instances when US Dollar Optix dropped below 40 for the first time in 3 months.  

The table below displays the summary of results.


In many instances this event signaled the resumption of an existing downtrend.  Whether or not that will be the case here remains to be seen. Still the factors to consider are:

  • US dollar in a downtrend (price below 200-day moving average and 50-day average below 200-day average)
  • Downside reversal in Optix below 40%
  • An upcoming seasonally unfavorable period

None of this precludes a continued rally in the US dollar.  But remember that trading is a game of odds and successful trading involves putting the odds as much in your favor as possible.  At the moment several objective factors appear to be stacking up against the dollar.


Sorry, this content is restricted to SentimenTrader members.

To read this post, please login to your account, sign up for our trading solutions or start a 30-day free trial.
LoginStart your 30-day free trial
DATA & TECH
IndicatorEdge
‍
BackTest Engine
‍
DataEdge API
REPORTS
Research Solution
‍
Reports Library
‍
Strategies
Index Trading Strategies
AI Stock Scanner
‍
PortfolioEdge
About us
Meet our Experts
‍
In the News
‍
Testimonials
Pricing
Bundle pricing
Subscribe to SentimenTrader's free newsletter
Get weekly highlights from our expert analysis, product updates, exclusive promotions, and invaluable educational content straight to your inbox. Sign up today and elevate your investing knowledge.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
© 2023 Sundial Capital Research Inc. All rights reserved.
TermsPrivacy
Risk Disclosure: Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Hypothetical Performance Disclosure: Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.

Testimonial Disclosure: Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.