One technical indicator suggests that the dollar has reached its most overbought level in 30 years. The z-scores of the currencies that comprise the ICE U.S. Dollar Index — the Canadian dollar, yen, British pound, Swiss franc, euro and Australian dollar — have all risen above six simultaneously for the first time since 1985. The index DXY, +0.32% is a widely watched measure of the dollar’s strength. (While there was no euro in 1985, the shared currency eventually replaced several European currencies as a constituent of the index). For those who haven’t taken an advanced statistics class, the z-score allows statisticians to make an apples-to-apples comparison between different data sets. If you’d like to learn more about the significance of the z-score, check out this handy Investopedia article. According to the analysts at Sundial Capital Research who compiled the report, the dollar’s relative valuation swelled to this level twice during the dollar rally of the early 80s — once in July 1982, and again in March 1985. As the charts below illustrate, the second hit immediately preceded a turning point in the dollar’s long-term trend. When the opposite was true — meaning the dollar was oversold against these same six rivals — short-term rallies ensued. While the data is a telling indicator of the market’s positioning, it doesn’t mean the end of the dollar rally is imminent, the analysts said. The sample size of the dollar’s rivals is “ridiculously small,” and that the bullish trend didn’t reverse until the second signal arrived. This signal comes as the dollar index is preparing to cross above the 100-mark for the first time since March — a level that analysts are watching with great anticipation. It was down 0.3% on the day to 98.9940 in recent trading. More from MarketWatch