Signs of weakness in the commodities complex, most notably in the precious metals, may be reflecting a confirmation of a major support level for the US Dollar Index is in the works. Shown here on the Autochartist 240-minute time interval, this support is represented by the bottom of a major Channel Down chart pattern which has defined the trading action for the bulk of the latest sell-off.

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Monday's trading saw a minor breach of this level, followed by heavy buying to a produce a quick recovery near 77.80, and close back inside the Channel Down support. This action may become a major swing low, with range trading to resume back inside the channel and ultimately retest the resistance level currently resting at78.85, which would likely continue putting pressure on the commodity sector as the dollar strengthens.

Alternatively, a continuation of the selling to below the Monday lows would signal a technical failure of the Channel Down support, and likely trigger a breakout signal with a significantly lower price forecast. This creates an opportunity to buy strength with a clear position to exit or reverse on a pattern failure.

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