{"id":193765,"date":"2023-07-24T03:46:08","date_gmt":"2023-07-24T07:46:08","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=193765"},"modified":"2024-01-24T12:13:05","modified_gmt":"2024-01-24T17:13:05","slug":"chart-advisor-the-dollar-pulls-back","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/chart-advisor-the-dollar-pulls-back\/","title":{"rendered":"Chart Advisor: The Dollar Pulls Back"},"content":{"rendered":"\n<p><strong><a href=\"https:\/\/www.investopedia.com\/contributors\/54841\/?utm_source=chart-advisor&amp;utm_campaign=fwd_chartadvisor&amp;utm_term=27774019&amp;utm_medium=email\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>By&nbsp;<\/strong><\/a><strong><a href=\"https:\/\/www.investopedia.com\/contributors\/54841\/?utm_source=chart-advisor&amp;utm_campaign=fwd_chartadvisor&amp;utm_term=27774019&amp;utm_medium=email\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>J.C. Parets<\/strong><\/a>&nbsp;&amp;&nbsp;<a href=\"https:\/\/get.allstarcharts.com\/?utm_source=chart-advisor&amp;utm_campaign=fwd_chartadvisor&amp;utm_term=27774019&amp;utm_medium=email\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>All Star Charts<\/strong><\/a><\/strong><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-friday-21st-july-2023\">Friday, 21st July, 2023<\/h2>\n\n\n\n<p><strong>1\/ The Dollar Pulls Back<\/strong><\/p>\n\n\n\n<p><strong>2\/ The Median Stock Runs Into Resistance<\/strong><\/p>\n\n\n\n<p><strong>3\/ New Highs for the Machines<\/strong><\/p>\n\n\n\n<p><strong>4\/ Will Crude Oil Follow?<\/strong><\/p>\n\n\n\n<p><em>Investopedia is partnering with All Star Charts on this newsletter, which both sells its research to investors, and may trade or hold positions in securities mentioned herein. The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-1-the-dollar-pulls-back\">1\/ <strong>The Dollar Pulls Back<\/strong><\/h2>\n\n\n\n<p>King dollar might have fallen to fresh 52-week lows, but it\u2019s not going down without a fight.<\/p>\n\n\n\n<p>The&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/u\/usdx.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9754605-20230721&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=072123\" target=\"_blank\" rel=\"noreferrer noopener\">U.S. Dollar Index<\/a>&nbsp;(<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=dxy&amp;hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9754605-20230721&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=072123\" target=\"_blank\" rel=\"noreferrer noopener\">DXY<\/a>) is trading back at a critical shelf of former lows as markets head into Friday\u2019s close.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/07\/1-14-1100x561.png\" alt=\"\" class=\"wp-image-193766 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/561;\" \/><\/figure>\n\n\n\n<p>A pullback in price can result in one of two ways: a standard retest followed by further weakness, or a&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/f\/failedbreak.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9754605-20230721&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=072123\" target=\"_blank\" rel=\"noreferrer noopener\">failed breakdown<\/a>&nbsp;resulting in a swift upside resolution.<\/p>\n\n\n\n<p>Price can chop sideways, of course, but stock market bulls the world over have their fingers crossed that it\u2019s not a failed breakdown.<\/p>\n\n\n\n<p>If the dollar does in fact rip higher, we could see an environment where the major U.S. stock indexes are under increased selling pressure\u2014especially those indexes heavily weighted toward the tech and&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/g\/growthstock.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9754605-20230721&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=072123\" target=\"_blank\" rel=\"noreferrer noopener\">growth<\/a>&nbsp;sectors.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-2-the-median-stock-runs-into-resistance\">2\/ T<strong>he Median Stock Runs Into Resistance<\/strong><\/h2>\n\n\n\n<p>When it comes to major indices, the&nbsp;<a href=\"https:\/\/www.investopedia.com\/articles\/stocks\/12\/value-line-investment-survey.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9754605-20230721&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=072123\" target=\"_blank\" rel=\"noreferrer noopener\">Value Line Geometric Index (VLG)<\/a>&nbsp;represents the median stock performance and is an excellent representation of how the broader market is performing.<\/p>\n\n\n\n<p>As you can see, the price is running into&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/r\/resistance.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9754605-20230721&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=072123\" target=\"_blank\" rel=\"noreferrer noopener\">resistance<\/a>&nbsp;at its 2018 highs, which coincides with the&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/p\/pivotpoint.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9754605-20230721&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=072123\" target=\"_blank\" rel=\"noreferrer noopener\">pivot highs<\/a>&nbsp;from last year.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/07\/2-15-1100x541.png\" alt=\"\" class=\"wp-image-193767 lazyload\" width=\"840\" height=\"413\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 840px; aspect-ratio: 840\/413;\" \/><\/figure>\n\n\n\n<p>This area of 595 is a logical level for sellers to show up and halt recent advances, just as last year.<\/p>\n\n\n\n<p>It would not be surprising to see some pause at current levels as buyers absorb supply at this critical resistance level.<\/p>\n\n\n\n<p>Stock market bulls will have plenty to celebrate if and when buyers reclaim this key polarity zone.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-3-new-highs-for-the-machines\">3\/ <strong>New Highs for the Machines<\/strong><\/h2>\n\n\n\n<p><a href=\"https:\/\/www.investopedia.com\/terms\/i\/industrial-goods-sector.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9754605-20230721&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=072123\" target=\"_blank\" rel=\"noreferrer noopener\">Industrials<\/a>&nbsp;have been one of the best-performing sectors on an equal basis since the list of new 52-week lows peaked in June of last year.<\/p>\n\n\n\n<p>One particular index that catches our eye this week is the Dow Jones Industrial Machinery Index:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/07\/3-17-1100x541.png\" alt=\"\" class=\"wp-image-193768 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/541;\" \/><\/figure>\n\n\n\n<p>As you can see, after a year of carving out a constructive&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/b\/basing.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9754605-20230721&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=072123\" target=\"_blank\" rel=\"noreferrer noopener\">base<\/a>, price broke higher, reaching new all-time highs.<\/p>\n\n\n\n<p>As long as these new highs stick, industrial machinery stocks and individual names within this space could have upside potential.<\/p>\n\n\n\n<p>Bigger picture: How bad can things be if industrial machinery is breaking out?&nbsp;Not bad.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-4-will-crude-oil-follow\">4\/ <strong>Will Crude Oil Follow?<\/strong><\/h2>\n\n\n\n<p>Talk of&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/d\/disinflation.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9754605-20230721&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=072123\" target=\"_blank\" rel=\"noreferrer noopener\">disinflation<\/a>&nbsp;is back in vogue. Yet the&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/b\/bondmarket.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9754605-20230721&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=072123\" target=\"_blank\" rel=\"noreferrer noopener\">bond market<\/a>&nbsp;fails to register the noise as rates remain elevated.<\/p>\n\n\n\n<p>Interestingly, our petro-currency index\u2014an equal-weight index of the Mexican peso (MXN), Brazilian real (BRL), Norwegian krone (NOK), and Canadian dollar (CAD)\u2014is running back to its 2022 highs.<\/p>\n\n\n\n<p>Based on the overlay chart of our petro-currency index and&nbsp;<a href=\"https:\/\/www.investopedia.com\/articles\/active-trading\/040615\/introduction-trading-oil-futures.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9754605-20230721&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=072123\" target=\"_blank\" rel=\"noreferrer noopener\">crude oil futures<\/a>, we have to ask:&nbsp;Will crude oil follow?<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/07\/4-17-1100x561.png\" alt=\"\" class=\"wp-image-193769 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/561;\" \/><\/figure>\n\n\n\n<p>We highlighted the widening&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/d\/divergence.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9754605-20230721&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=072123\" target=\"_blank\" rel=\"noreferrer noopener\">divergence<\/a>&nbsp;between these charts in early June.&nbsp;Crude oil futures have rallied more than 10% since. And the FX market continues to lead \u201cblack gold\u201d to the upside.<\/p>\n\n\n\n<p>Buying tech stocks might feel like a slam dunk right now. But perhaps energy and crude oil deserve more attention.<\/p>\n\n\n\n<p>The FX market thinks so.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally posted 21st July 2023<\/p>\n","protected":false},"excerpt":{"rendered":"<p>King dollar might have fallen to fresh 52-week lows, but it\u2019s not going down without a fight.<\/p>\n","protected":false},"author":186,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21,14,16,17,18,6,8,9,22,23,26,3],"tags":[1779,13009],"contributors-categories":[13686],"class_list":{"0":"post-193765","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-commodities","7":"category-etfs","8":"category-forex","9":"category-futures","10":"category-macro","11":"category-north-america","12":"category-region","13":"category-securities","14":"category-stocks","15":"category-technical-analysis","16":"category-text-articles","17":"category-traders-insight","18":"tag-dxy","19":"tag-vlg","20":"contributors-categories-investopedia"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast 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