After watching the U.S. dollar drift lower for the last two months… we’re in the Buy Zone again.
Here’s a quick chart of U.S. dollar futures. This should look familiar. I shared it with you in mid-March as the dollar was approaching significant resistance between 82.50 and 83.50.
Sure enough, after hitting 83.50, the dollar rolled over and drifted about 3% lower through April.
To me, this now looks like an opportunity. Selling looks weak, so I’m expecting this to be just a short-term pullback in a longer-term uptrend.
That means it’s time to buy the dollar again.
The buy zone I’ve identified (the blue lines on the chart above) is based on Fibonacci retracement levels. If you’re a futures trader, look to buy between 81.50 and 82. If you prefer trading ETFs, a good alternative is the PowerShares U.S. Dollar Bull ETF (NYSE: UUP), which looks like a good buy between $22.10 and $22.40.
The great thing about the U.S. dollar is it’s still the go-to “safe haven” play, providing a natural hedge to global economic uncertainty.