Author: Michael Arold
Model: Technical Swing
Disclosure: Long SLV, UDN
In a recent post, I hypothesized that the US dollar could shape up a bullish “declining wedge” chart pattern, which could lead to a sharp reversal in Silver prices. A fresh look at the chart shows that the opposite happened: instead of breaking to the upside, the Greenback completed the pattern with a break to the downside. Therefore, the reversal scenario is – technically – currently not in the cards.
A second look at the chart also reveals that downside momentum was declining at the end of 2009, indicated by a divergence in the MACD price filter. A similar divergence did NOT show up in 2011. The negative price trend even seems to accelerate:
Keep an eye on momentum acceleration of the Dollar. The Greenback could dominate headlines in the next weeks.
Chart source: StockCharts
