DXY

Although I remain long-term bullish on the dollar, I've been unimpressed with the quality of the rally that has unfolded over the last three weeks. Although DXY has risen by 2.6% over that time, the so-far high at 95.15 failed by nine cents to achieve a clear target at 95.24 that I'd aired here. It also failed to exceed an 'external' peak at 95.15 recorded on July 20. Taken together, these signs suggest that bulls may be too tired or timid at the moment to drive the dollar into a convincing rally. Accordingly, I'll raise the bar somewhat just to be doubly sure buyers mean it on the next upthrust, if and when it comes. Specifically, I'll suggest holding your enthusiasm in check until such time as DXY exceeds the 96.51 'external' peak shown. _______ UPDATE (Nov 10): Two weeks of tedious head-butting narrowly failed to get DXY past the 95.24 pivot noted above. We'll avert our eyes for now, lest we be lulled into coma as DXY pulls back to get some running room.

The dollar will have a chance to get airborne this week by breaking out of a consolidation begun a month ago.  If so, it would likely put more pressure on bullion, which has been weak recently to begin with. There are two price points shown in the chart that we can use to benchmark the rally: 94.11, the Hidden Pivot target of a minor bullish pattern that has been taking shape for nearly two weeks; and  the October high at 94.27 recorded a week earlier. If the Dollar Index is sitting above the lower number come Friday, you can safely infer it's on its way to at least 95.24 (60-min, A=91.78 on 9/22). ______ UPDATE (Oct 25, 8:20 p.m.): Buyers couldn't get past 94, where resistance appears heavy and sellers determined. Look for another charge from lower levels by week's end. _______ UPDATE (Oct 26, 10:21 p.m.): The Dollar Index is moving precisely as forecast.  It'll need to push past the 95.24 pivot, however, to demonstrate eagerness and ability sufficient to keep the rally going._______ UPDATE (Oct 29): Buyers stopped just a hair shy of the target on Friday.  I expect them to reach it this week, but let's see what happens rather than try to predict it. An easy move through the pivot would indicate still-higher prices in the days ahead.  _______ UPDATE (Oct 31, 4:34 p.m.): Thursday's powerful leap brought DXY to within 9 cents of the 95.24 target, but bulls will have to exceed it decisively in order to maintain the strongly bullish look of the intraday chart.

The dollar has risen moderately in the last month, but the rally so far has fallen well short of the threshold needed to put the 115.92 target shown (see inset) in play. That would require a print at the green line (97.24), which lies about 5% above current levels.  Even that wouldn't suffice to generate a bullish impulse leg on the weekly chart, however. That hasn't occurred in nearly a year, and it would require a thrust exceeding the 97.87 'external' peak that I've labeled. My long-term outlook for the Dollar Index is quite bullish and calls for an eventual test of a peak near 121 made more than 15 years ago.  As things stand, though, we can set a snooze alarm to ring if 97.87 is surpassed, since anything short of that will be just noise.

I've mentioned elsewhere on the home page today that if and when the dollar finally turns bullish, the bull market for stocks begun in 2009 will be over.  Bonds and bullion will be the place to be -- but so will the dollar itself. Let's speculate on this with a 90.92 bid for 400 shares, day order, no stop.  The bid lies four cents above the clear Hidden Pivot target at 90.88 shown in the chart. If the order goes in the black, plan on exiting half the position at 92.05. _______ UPDATE (Sep 11, 5:53 p.m. EDT): Since this vehicle doesn't trade, we'll look the next time to do our bottom-fishing in the futures contract (DXZ17 is currently  the active month).  For now do nothing further, since the dollar has rallied sharply from just above our Hidden Pivot target.

It is only on the very long-term charts that we can see that the dollar's unabated weakness since January has actually been part of a larger, very bullish chart pattern going back six years. In fact, the decline so far, from a 103.82 peak to a recent low at 95.47, has yet to exceed even a single prior low. Moreover, the decline would need to continue all the way to 78.91 to diminish the bullishness of this chart. Another plus for the dollar is that before it began to fall, the January high exceeded an external peak at 102.15 recorded in March 2003, creating a still-viable impulse leg of monthly-chart degree. The foregoing suggests that the long-term-bullish case deserves the benefit of the doubt despite current weakness. I expect the decline to continue well into summer, but if and when it reaches 92, near the May 2016 bottom, we could see the best buying opportunity in more than three years.

I've included the Dollar Index in today's list of touts not just because the U.S. dollar's ups and downs affect the economic world more than any other trading vehicle, but also because the greenback is moved by market forces far bigger than the eggheads, navel-gazers and charlatans at the Fed could pretend to control. The long-term chart is unambiguously bullish, notwithstanding the stall since December. This stagnation presumably is corrective, since the Nov/Dec peak exceeded a prior high at 102.15 recorded back in 2003.  That makes the rally itself, from last May's 91.92 low to the recent high at 103.82, bullishly impulsive -- an analytical distinction whose significance would not be lost on our Elliot-Wave colleagues. While I would not hazard a prediction about how long it will take for the dollar to consolidate in order to achieve the 113.40 target shown, when the move finally happens, as I very strongly expect it will, bullion prices, U.S. manufacturers' overseas profit margins and all who owe dollars will come under renewed pressure. _______ UPDATE (Feb 26, 7:57 p.m.):  Last week's pullback tripped a 'mechanical' buy signal at 100.83 off the pattern shown. If this bounce achieves and then exceeds the 102.09 target, it will shorten the odds that the Dollar Index is on its way, eventually, to 113.40. _______ UPDATE (Mar 2, 8:52 p.m.): Today's thrust somewhat exceeded the 102.09 target, implying that still-higher prices are coming, presumably to 113.40 eventually. _______ UPDATE (Mar 19, 6:00 p.m.): With last week's moderate selloff of the dollar, traders seemed to be betting that France's election on April 23 will go the way Holland's went -- i.e., with a less-than-decisive victory for the 'Trump candidate', Marine Le Pen.  This strikes me as a dangerous bet, but we shouldn't be surprised if the trend continues

When you look at the accompanying chart of the U.S. Dollar Index, do you see an ominous head & shoulders pattern?  If so, you've probably got plenty of company, including dollar bears and chartists who see bogus H&S patterns everywhere they look. I mention this because those dollar bears have ratcheted up the hubris in recent weeks for the usual stupid reasons: collusion by America's enemies to usurp the dollar's unshakable global hegemony; an imminent outbreak of inflation; an overdue bear market; seignorage envy. The usual claptrap. When I look at the chart, however, I see a rally so powerful that it not only blew past centennial resistance and a daunting Hidden Pivot at 100.55, it is now tap dancing on those erstwhile obstacles as though intending to launch powerfully anew. Don't get me wrong, the dollar could still pull back, perhaps sharply, before it embarks on a renewed tear toward targets as high as 120 that I've broached here, and in countless interviews, before. From my technical perspective, insatiable dollar buyers from around the world have made chop suey out of an erstwhile granite ceiling. So color me bullish -- and a deflationist until the cows come home. ______ UPDATE (Jan 5, 11:03 p.m. ET): The dollar has come down hard this week, but the selloff has done little technical damage so far to the daily chart. However, a fall exceeding 100.73  would turn the chart impulsively bearish and trigger a yellow flag. ________ UPDATE (Jan 12, 10:36 p.m.): It's tempting to ignore the fact that the little sonofabitch printed 100.72 (!) at the intraday low.  Still, an impulse leg is an impulse leg, and we'll have to treat it as such for purposes of targeting. First, though, let's see how far this bounce from a crystal-clear target at

As of Memorial Day, the Dollar Index has rallied to within 0.12 points of the 96.12 target given in my last tout. It will need to push somewhat higher, however, to suggest that the long-term bull market is back on track. Specifically, a thrust exceeding the 96.40 peak labeled in the chart would generate a powerful new impulse leg of daily-chart degree. As things stand, the closest short-term target will only get DXY to 96.29 (A=94.33 on 5/17). Traders please note: A bc-type pullback from just above the 96.22 peak recorded on March 22 could provide an excellent opportunity to get long via camouflage. In any case, this would be analytically useful for projecting a precise target for the next minor leg up. If there is a fundamental reason to think the rally will continue, it lies in growing perceptions that the Fed can now raise rates without trashing the stock market. This is the kind of 'story' that could be supportive of the dollar for quite a while. It doesn't hurt that eurozone rates are negative and slipping into a bog of deflation that portends continued, weak economic performance.  For a contrarian view on the potentially negative effects of Fed tightening, click here, then click again on the phrase 'Should the Fed raise rates'.

Bingo! Friday's powerful rally exceeded by nine cents the 94.76 Hidden Pivot target we'd been using to keep us confidently and securely on the right side of the trend. DXY popped to an intraday high at 94.85, slightly overshooting our price objective. This implies that the rally is likely to continue in the days, or perhaps even weeks, ahead. The move would need to hit 96.41 to turn the daily chart impulsively bullish. The last time that happened was in November, but it proved to be a false start. We'll be better able to judge the staying power of the rally by observing minor corrections closely. If the larger picture is to remain bullish, we should see downtrending abc patterns on the lesser charts fail to reach their 'd' targets. _______ UPDATE (May 22, 12:59 p.m. EDT): Use the pattern shown (inset, a new chart): to gauge the dollar's strength, or lack of it, in the days ahead. A move Monday or Tuesday past the midpoint Hidden Pivot at 95.59 (the red line) would affirm the bullish case for the near term and set DXY on course for a run-up to at least 96.09.  As always, a decisive breach of any Hidden Pivot level would portend more upside to the next.