A breakdown in the U.S. dollar could push stocks even higher since the two asset classes have shown a negative correlation.
“One of the intriguing catches to head and shoulder patterns is that they can fail very easily, when they are at the lows of the chart,” warns Gareth Soloway, chief market strategist at InTheMoneyStocks.com.
“This head and shoulder pattern is at a low. Should a head and shoulder pattern fail, look for a strong reversal in the Dollar,” he writes. “The markets and the Dollar trade inverse to each other. The Dollar leads the markets. Therefore, this pattern is extremely important to watch as it controls the future of the markets.”
PowerShares DB US Dollar Index Bullish
