Doug McLagan and I were on the same, bullish track when we posted, respectively, bullish touts for the December Dollar and the NYBOT Dollar Index. Note that this is corroborated by the improving outlook for the December T-Bond. Some may have given it up for dead, but it has moved within easy distance of a peak1 whose breach would create a powerful impulse leg on the hourly chart.
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NYBOT Dollar Index
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I’m not big on head-and-shoulders patterns because they are everywhere one looks for them, but if the one shown keeps pounding away at the neckline of this misshapen specimen it could trigger a two-point break. Alternatively, buyers would need to drive DXY above the 77.95 external peak to regain the offensive. If weakness implies the euro is about to surge, the headlines that we should expect to accompany such freakish behavior are difficult to imagine. Maybe this: Europe Goes All-In on Greek Debt.
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Two compelling trends, both of them nicely visible on the 240-minute chart (see inset), imply that DXY is bound for a minimum 80.10 once it surpasses a lesser ‘D’ target at 79.17. So far, the index has stalled within two ticks of that number, a Hidden Pivot midpoint resistance, but once above it the run-up to 80.10 would become an odds-on bet. Lest we be caught without an even more ambitious target if buyers should run amok, here it is: 81.49 (A=74.68, B=78.86, C=77.31). At that point, the dollar will have rallied 12% from its early-May lows, but it would need to reach 87.50 for the 20 percenter that would qualify as a bull market.
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Strong Dollar Predicting Europe’s Breakdown
by Rick Ackerman on September 22, 2011 2:10 am GMT · 15 comments
The dollar looks primed to move significantly higher, implying that U.S. stocks and precious metals will remain under pressure for the foreseeable future. That doesn’t necessarily mean Gold and Silver cannot continue to rise against all currencies nonetheless, since the global monetary blowout that has caused them to ascend for more than a decade shows no sign of abating. However, whatever strength bullion musters in the weeks and months ahead will in dollar terms be tempered at least somewhat by a resurgent buck. We recently called subscribers’ attention to a possible nascent bull market in the dollar via a trading “tout” that recommended setting a chart alert at 78.87, about 0.6 percent above where the NYBOT Dollar Index was trading at the time. Yesterday, the Index spiked to within 3 cents of that benchmark, so officially the baby bull has not yet been born. However, during an online tutorial session that we conduct every Wednesday morning, we had a powerful sense of déjà vu yesterday while looking at an hourly chart of the Dollar Index. (Want to be alerted in real time to these changes? Click here for a free trial subscription to Rick’s Picks, including access to a chat room that goes ‘round-the-clock, and to trading recommendations and analysis that are continually updated during market hours.) » Read the full article