The Symmetrical Triangle Breakout And The U.S. Dollar Index

The 20% appreciation in the U.S. Dollar Index has decimated many commodities. For example Crude Oil is down 60% from the June highs, while Gold, Silver and Platinum are down approximately 25%.  Before you go bottom picking in these volatile commodities, let us first update the current technical condition of the U.S. Dollar Index. It is important to remember that when trading industrial commodities and precious metals it is essential to watch the level of the U.S. dollar, since commodities often move inversely to the price movements of the greenback.

MARCH 15 U.S. DOLLAR INDEX FUTURES - DAILY

Chart provided by QST

The Symmetrical Triangle

This pattern is identified by drawing two trend lines that connect a series of sequentially lower peaks and a series of sequentially higher lows. Both trend lines act as barriers that, at least temporarily, prevent the price from heading higher or lower. However, once the price breaches one of these levels, a sharp movement often follows. A symmetrical triangle is generally regarded as a period of consolidation that takes place before the price moves beyond one of the identified trend lines. A break below the lower trend line is used by technical traders to indicate a move lower, while a break above the upper trend line signals the beginning of a move upward. In addition, it is important to monitor volume levels when the breakout occurs because a substantial increase in volume tends to add validity to the break out signal. Please refer to the chart for our key technical levels.   

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