NYBOT Dollar Index

The presumptive consolidation from Friday’s highs has proceeded without tripping any false buy signals on the three-minute chart. What this suggests is that traders can and should use this chart to spot the subtlest sign of a breakout reversal. In this technical environment, the first AB impulse leg that occurs seems likely to take you to the CD midpoint, at least.  Bear in mind that the single-bar ‘C’ in this instance will yield the best trade set-up we might look for. Upside potential is to 83.32, or 83.75 if any higher. _____ UPDATE (11:18 a.m. EDT): The suggested trade would have been profitable, although staying aboard for an even bigger rally that came later would have taken patience.  Sticking to the single-bar ‘C’ rule got one long at exactly 82.97 at 4:57 a.m. EDT. Contact with the midpoint, and therefore an opportunity to take profit on half the position, occurred about 18 minutes later. FYI, the single-bar ‘C’ was at 4:39 a.m.

Friday’s low at 82.08 fell within 0.08 points of minor Hidden Pivot support that so far appears to be doing its job. The bounce will have to clear 83.51 to look like the beginning of a real turnaround, however, and my hunch is that it will fail. I don’t usually cite “fundamentals,” but in this case European intimations of “austerity” should suffice to put a lid on the dollar, even if it’s “too-big-to-fail” appeal will likely remain as a rationale for more than a mere handful of institutional lemmings.