Study: what happens next when the U.S. Dollar makes a "Golden Cross"


The USD Index’s rally from April-May 2018 is the first real USD rally in more than 1 year. As demonstrated through previous studies (here and here), this is a short-medium term bullish sign for the USD and bearish sign for the Euro (EURUSD accounts for 57% of the USD Index).
Today’s study demonstrates something similar. The USD Index just made its first “Golden Cross” in more than 1 year.
*”Golden Cross” = when the market’s 50 daily moving average crosses above its 200 daily moving average.

This is a short-medium term bullish sign for the U.S. Dollar. When the USD made its first “Golden Cross” in at least 1 year (historically), it usually continued to go higher in the next 2-3 months.

Click here to download the file in Excel.
As you can see, the U.S. Dollar Index’s forward returns on a 2-3 month basis are mostly bullish.

Conclusion

The U.S. Dollar will probably head a little higher in the next 2-3 months before topping. Remember the adage “strength begets more strength”.

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