Well, based on the latest charts, I think I'm going switch my opinion from bearish to bullish. Let me explain...
First, when the dollar started to break down from its pennant formation in late August, it was aggressively bought and as a result, posted a massive bullish candle on the weekly close. That was sign #1 that the USD had some serious support. Second, it has recently reversed higher and its momentum indicators are confirming a bullish bias. The RSI has found very firm support at its mid-line and the MACD is about to make a bullish cross after working off the bulk of its oversold condition. Lastly, one could argue that the current consolidation pattern is shaping up as a bullish double bottom. From a technical standpoint, it meets most, if not all, of the requirements. The consolidation is coming on the heels of a steep move higher, the August lows undercut the previous lows from May, and now the Dollar is working on building the right side of the pattern. Much still has to happen to complete the pattern, but as far as I can tell, so far so good. The bottom line here is that the charts are painting a much more bullish outlook than bearish at this point.
So what happens if the double bottom comes to fruition?
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