Thursday, June 16, 2011

DXY appears to be consolidating above the 75.35 midpoint of a bullish pattern on the hourly chart projecting to as high as 77.18. If a move to that number is indeed under way, it would exert pressure in the weeks ahead not only on gold and silver, but on stocks. We should therefore monitor this vehicle closely. Most immediately, a print today exceeding the 75.85 'external' peak on the hourly chart (see inset) would further embolden bulls and put more short-squeeze pressure on bears.

Yesterday's high failed by two cents to surpass a distinctive peak on the hourly chart at 35.995, hinting of more tedium in the days ahead.  We'll raise the bullish threshold a tad today, to  36.355 (see inset), to alert us to a potentially bullish tone change, but it will be of greater use to day traders than to those who would surf the bigger trends.

The robustness of the long-term bull has been sufficient to keep the futures buoyant since early May's corrective low, but because buyers are in no particular hurry to bolt for the next bullish plateau near 1600.00, they've been subjected to considerable buffeting.  For the time being, 'dueling' impulse legs are predicting more tiresome volatility -- nothing that a pop today exceeding 1545.50 wouldn't resolve.

Hidden Pivots are less important to our immediate outlook than the March 17 low at 1237.50.  It begs to be tested, although we should monitor the lesser charts for signs of the corrective rally that could come at any time. It would take a print at 1268.25 to touch one off today, although the external peak associated with that number looks too obvious to give the canny buyer good camouflage. The peak can be found on the 5-minute chart on June 15, at 12:10 p.m. EDT.