Possible Future Rally in Dollar Strength 8/25/2020

DXY at the daily view.

The dollar seems to found support from a long-term support (blue line. However, it's meeting resistance from its former 11-year-old uptrend channel (dashed green line). What I am seeing is a possible inverse head and shoulders pattern starting to form. If that right shoulder forms, then that's a possible bullish pattern. I say possible because IHS patterns are not bullish until the neckline breaks.

Currently, shorting the dollar is crowded which means it's exhausting the supply of sellers faster than the buyers. Therefore, it may be vulnerable to a sharp rally. If this IHS pattern forms, then it may be the nail in the coffin for those shorts. Now, there is still a downtrend channel and two major resistances above that channel. All because it rallies doesn't mean the overall trajectory changes.

However, if this IHS pattern does play out, this may provide an excellent entry opportunity for oil, precious metals, and any large cap company that relies on non-US countries such as semiconductors and big tech in general. That may provide the opportunity to shake out the gold/silver permabulls make metals "scary." When it's "scary," that's actually the time to go long.

ca.finance.yahoo.com/news/hedge-funds-warn-crowded-dollar-000451307.html