dollar index with the 50 day and 200 day moving averages
Dollar index with the 50 day and 200 day moving averages

Bank of America (BofA) has shared insights into 8technical strategies based on historical performance data, revealing a variety of potential investment patterns. Key findings include:

  1. Golden Cross: This event, when the 50-day moving average (MA) crosses above the 200-day MA, tends to precede rises in the DXY (Dollar Index) 65-79% of the time, typically 20-80 days later. The S&P 500 (SPX) also tends to deliver strong returns 30, 65 and 195 days post Golden Cross, with an uptrend observed 75% of the time.

  2. Death Cross: When the 200-day simple moving average (SMA) is declining, the DXY has historically been lower 11 of 13 times 5-25 days later. Ten-year US Treasury yields often rise 65-76% of the time 45-60 days post Death Cross.

  3. Ichimoku: In forex markets, bullish (bearish) signals occur when the conversion line crosses above (below) the base line with a green (red) cloud. High success rates have been observed in USDKRW, USDINR, NZDUSD, USDTHB, and USDZAR pairs under these conditions.

  4. DMI with ADX: In G10 forex, bearish DMI crosses with an ADX below 15 or spot below the 50-week SMA have historically signaled downtrends.

  5. Bollinger Bands: G10 forex has shown a tendency to breakout more than mean-revert when price first exits a 26-week band, with signals being more prominent when the USD weakens.

  6. TD Sequential™: Historically, USDSEK often rises 72% of the time 5 weeks after a TD Setup 9 weekly buy signal below the 100-week SMA. GBPUSD also tends to rise 80% of the time 5 weeks post a TD Countdown 13 weekly buy signal.

  7. Breadth Thrust: The S&P 500 has typically traded higher 82% of the time 250 days after a breadth thrust, with average and median returns of 17.5% and 21.2% respectively.

  8. Coppock Curve: Since the 1930s, when the Coppock Curve ticks up while below zero, the S&P 500 has averaged 12-month returns of 11.1%, with median returns of 16.4%.

While these strategies provide historical insights, BofA reminds investors that past performance is not indicative of future results.

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