DXY – NYBOT Dollar Index (Last:88.22)

I remain very bullish on the dollar and expect it to achieve the 90.00 target shown by early 2015. However, it is clearly winded after the steep run-up since July, resulting in more frequent consolidations to develop thrust for each successive new high. Another factor contributing to the rally’s timidity of late is the implied resistance of two key peaks made, respectively, at 88.71 (June 2010) and 89.62 (March 2009).  A true bull-market breakout will require a push past these peaks, and although that outcome seems likely, it could take a while. However, if DXY were to effortlessly power past the peaks within the next 4-6 weeks, it would imply there’s still enormous power in reserve to drive the bull market significantly higher. _______ UPDATE (December 9, 7:48 p.m.): DXY has sold off sharply after topping on Monday at 89.55, just a hair below the March 2009 peak. This was to be expected, but once the correction has run its course I expect the dollar to continue its bullish rampage. We’ll be better able to time the reversal when we’ve seen the downtrend interact with some minor Hidden Pivot supports. The first of them are shown in the chart, and they lie, respectively, at 88.23 and 87.67. If the uptrend is ready to resume, this correction should reverse from the higher number. If, on the other hand, buyers need more rest, we should see the lower number exceeded within the next day or two. _______ UPDATE (December 10, 6:01 p.m.): Surprise, surprise. Yesterday’s selloff came to rest a penny off the 88.23 pivot flagged above. Now, a decisive breach, if it comes, would portend more downside to at least 87.67.