Yesterday’s nuttiness left a mildly bearish hangover, since it took out a midpoint support at 75.02 before calling it a day. The ‘D’ target sibling of this number is 74.64, a Hidden Pivot that can serve for now as a minimum downside objective. But bulls will have a chance to turn things around from 74.750, the midpoint support of a lesser pattern. More bullish still — quite bullish, in fact — would be an intraday pop today above 75.435.
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Various news sources reported last week that the sovereign banks of the world were intent on supporting the dollar, so worried have they evidently become that the U.S. currency’s weakness will kill their already frail export economies. With the dollar falling anew anyway, the question is whether it may have become unsupportable — and what a pity that would be, since it would be the beginning of the end for the global financial system. As of Sunday night, weakness was eroding the last vestige of last week’s sharp but probably gratuitous gains, challenging the central banks to put their money where their big fat mouths are. If they’re planning on a support operation, we’d suggest using the Hidden Pivot support at 74.625 to pop a short squeeze. Any lower, though, and the futures will be warning of the futility of trying to get a dead duck to fly.
The dollar is sinking in night trading, with support in prospect most immediately at 74.910. We’ll use that Hidden Pivot midpoint as a minimum downside target for now, but if it gets shoved aside, look for more damage to as low as 74.440 over the near term. Alternatively, the futures would need to hit 75.515 today to turn the 30-minute chart bullish.
You asked, we listened. I’ve switched from the cash index to the futures contract, since some subscribers evidently trade this vehicle. It’ll need a print above 75.175 today to turn the lesser charts in bulls’ favor. Barring that, look for weakness over the near term to take the futures down to at least 74.440. An HP midpoint at 74.905 can be used to confirm.
