Chart of the Day - Thursday, December 3rd, 2020

Today’s Chart of the Day was shared by Chris Kimble (@KimbleCharting). It’s a monthly chart of the US Dollar Index ($DXY) going all the way back to 1985. $DXY fell for the third straight day today and is now decisively below that key $92 support level that we highlighted a couple of weeks ago. Chris gives us three reasons why $DXY could continue trending lower over the next few months. (1) Earlier this year, $DXY tested and failed at the upper bounds of a 20-year falling channel (in red/purple). (2) It has recently broken below the lower bounds of a 9-year rising channel (in green). (3) It has formed a double top at the 61.8% Fibonacci retracement of the 2002-2008 decline. To be fair here, the death of the Dollar has become a crowded trade at this point with shorts nearing record levels. Either way, we want to continue to keep an eye on the Dollar here as it will likely have an impact on other risk assets including Large-Caps, Commodities, Emerging Markets, and even Bitcoin. For more on this, check out the full note here.