By Doug Busch
When tensions rise in the Middle East, markets respond as a macro shock that is felt across asset classes. A surge in crude oil prices can quickly alter interest rate expectations, bolster the U.S. dollar, pressure stocks, and tighten financial conditions.
Let's examine the five-year monthly chart of the U.S. dollar via the Invesco DB U.S. Dollar Bullish Fund. The ETF tracks the greenback against a basket of six major currencies, including the euro, yen, pound, and Swiss franc. Beginning in June 2021, following a bullish engulfing candle, the ETF embarked on a steady uptrend from $24 to $30, culminating in a bearish evening star pattern completed in November 2022.
Prices have largely moved sideways since. Bullish engulfing candles in February 2023 and July 2025 marked key lows within that consolidation, while bearish engulfing, dark cloud cover, and doji candles in November 2023, December 2024, and January 2025 signaled resistance near the upper end of the range.
With sentiment toward the dollar currently subdued, there is a reasonable case for a move back toward the round $30 level before this run ends. Remain bullish above $26.75 on a closing basis.
The Invesco DB U.S. Dollar Bullish Fund was trading around $27.50 Tuesday.
If the U.S. dollar continues to appreciate, it will likely pressure commodities, gold included. Safe havens aren't always immune when currency strength is the driver, and gold, via the SPDR Gold Shares, is no exception. The ETF now sits 8% below its recent 52-week high. The final week of January marked a dramatic reversal, with GLD closing 13% off its intraweek high on the largest weekly volume ever recorded.
Looking at the ETF's one-year daily chart, it first stands out how it lagged its precious metals cousin, silver, during silver's historic surge, however, that relative weakness now appears to be stabilizing on the ratio chart. Round numbers have clearly mattered. The ETF found prolonged comfort near the $300 level between April and August, then carved out a cup with handle formation last fall around $400.
On Jan. 29, GLD moved above $500 intraday but failed to hold that level. The very next session delivered a stunning reversal, as the ETF dropped more than 10%, its largest single-session decline on record, on massive volume. That shift in character raises an important question. Has a double top formed near $500?
A bearish hanging man on Feb. 26 followed by a doji yesterday suggests the potential for a change in trend from the prior advance. A move toward $410 by month end is possible, which would represent roughly a 12% decline from current levels and could set the stage for a constructive double bottom formation. GLD was trading around $467 Tuesday.
The State Street SPDR S&P 500 ETF, which tracks the world's most closely watched index, hasn't recorded back-to-back weekly gains in three months. Remarkably, the ETF entered today's session just 2% below its most recent all-time high, even as many of its underlying components sit 10% or more beneath their own annual peaks, a notable contrast beneath the surface.
It's no secret the SPY has struggled to break through the seemingly brick wall resistance at the very round $700 level. The daily chart now reflects a bearish rounded top formation. Over the past month, heavier volume has consistently appeared during down sessions, a subtle but important shift in character. Since the start of 2026, bearish RSI divergence has also developed, with the RSI line fading even as price continued to grind higher.
Near term, look for the SPY to test its upward sloping 200-day simple moving average near $660, which would represent roughly a 4% pullback from current levels. If and when that level is reached, we can reassess at that long-term secular trendline.
The State Street SPDR S&P 500 ETF was trading around $671 Tuesday.
In uncertain environments like this, capital preservation begins with respecting the macro backdrop.
Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 03, 2026 11:02 ET (16:02 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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