U.S. Dollar Index Futures (ICE Futures U.S.DX) dropped 0.1% on Friday to close the session 73.075. Despite the small decline, DX crossed below its 50 and 100-day moving average after it crossed above them just one day prior on Thursday. Such price action has been unfavorable to DX in the past, especially when Gold Futures (NYM.GC) rally on the day, as they did do.
Note: As can be seen from the daily bar chart, DX has reached a resistance level.
Q: How has the dollar index performed in the past, omitting repeat occurrences within 10 trading days, when, on a day gold futures posts a rally, it crosses below its 100-day moving average after it had crossed above it the day before?
A: According to the 16 previous occurrences of this event, EventEdge indicates that DX has shown a very strong bearish edge that peaks nine trading days after the event. Thus, the projected date for the peak of the bearish edge relative to the current event date (Friday, July 25, 2008) is Thursday, August 7, 2008.
DX declines in 94% of the cases (15 of 16) by an average of 1.9% relative to the close on the event date. The average of the one rally is 1.0%. The overall return of the 16 cases is -1.7%, which, based on the close on the event date (73.075), provides a target price of 71.833.
To view this idea in our EventEdge® analysis tool click here.
Ronish Patel is an analyst with MarketHistory.com.
