Is The Dollar Index Setting Up For Further Strength?

My last post on the Dollar Index highlighted the 4% decline in the price. 

Price movement has been slow on the Dollar Index, but this can and will change in the blink of an eye. Since my last, the price has recovered back to the July high. 

The price had been trading inside a 7-year consolidation before breaking out in June of this year. 

As the expression goes, the longer the consolidation, the bigger the breakout. However, it can take time before momentum kicks in. 

Below I have the monthly timeframe. 

I have highlighted the 4% move to the upside since breaking out from consolidation. 

Below I have the daily timeframe. 

Let's look at this 4% move in more detail.

Price formed a cup and handle before eventually pushing to the upside. However, natural price movement almost always dictates a pullback to retest a resistance-turned-support level. That is what we have witnessed through July, followed by a bounce back to the high of July in August.

Look closer, and the price could be forming yet another cup and handle. 

In a bull trend, a cup and handle is a continuation pattern. 

The next breakout will be significant and could be the catalyst that the price needs to push ahead with momentum toward the 120 round number.

As a trend follower, I look for linearity in a trend. This is when the price forms higher highs and higher lows, supported by the 20 simple moving average and the 50 simple moving average. 

If we do get this setup, which is not a guarantee, but it is looking likely, we can expect the major USD pairs to trend. The strongest pairs will make it into my portfolio. 

I am now applying patience and waiting for the price to dictate the right setup before taking a position. I will make up for lost time through holding and compounding. 

Less is more with sound investing.

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