DXY

The U.S. dollar stands to become the hardest currency on earth if the Fed tightens in earnest. Even if they tighten only a little, as seems more likely, they will be the only central bank on earth doing it. Presumably, that would lend firmness to the dollar in a world of squishy currencies.  We'll be better able to judge the power pushing this rally once we've seen how in interacts with various hidden Pivot resistance points. Thursday's push slightly past the midpoint pivot was unimpressive, but I expect USD to try again, and to gain momentum, once decisively past the pivot. If so, look for D=101.12 to be achieved by as soon as next Friday. Nothing could be more deflationary than a strong dollar, so we had better be careful what we wish for. My long-term forecast for this vehicle implies that highs recorded near 120 about 13 years ago will be tested. If so, the Fed and all of the central banks acting in concert will not be able to slow it down, let alone control it.______ UPDATE (December 28): The dollar index has turned weak, but the bullish look of the daily chart has not yet been affected. _______ UPDATE (December 29, 8:33 p.m. EST): Today's Whoopee Cushion rally has changed the short-term picture.  Now let's see if it can get legs. _______ UPDATE (January 3, 7:38 p.m. EST): The rally has been picking up steam, with a thrust past a 98.62 midpoint resistance on Thursday that has put a 99.44 target in play. The new chart shows p, p2 and D, each of which can be used to set up trades from either the long or short side of the market. _______UPDATE (January 6, 9:32 p.m.): The target was reached, then slightly exceeded. This implies that the

Yesterday's breach of a midpoint Hidden Pivot support at 97.46 suggests the dollar will head lower before it can turn around.  Specifically, a path to at least 96.74 has opened, or possibly even to 96.02 if the higher number gives way easily. My long-term forecast for the Dollar Index remains extremely bullish nonetheless, with a projection of 120 within the next three years. However, if the 96.02 target is decisively exceeded, especially the first time it is touched, that would signal a potential month or more in the wilderness for the almighty buck. This seems unlikely to me because it implies the euro will continue to strengthen.  I must confess that I lack the imagination to see how this could possibly occur. Readers? ________ UPDATE (5:24 p.m.): Thursday's moderate rally left the short-term picture unchanged. I'm still looking for minimum downside to p2=96.74, although a thrust first exceeding 98.90 would signficantly brighten the outlook.

The dollar's price action has been balky lately but it is bullish nonetheless.  Friday's thrust reversed a bearish impulse leg on DXY's hourly chart that had been created the day before. Buyers will need to keep the rally going on Monday, however, to take charge of the intermediate-term trend.  Specifically, they will need to generate a C-D follow-through leg similar to the one shown. If they easily achieve its D target, that would be a positive sign, but a move that easily exceeds it would be telegraphing more upside to come. _______ UPDATE (8:57 p.m. EDT): Buyers flunked a test yesterday. Now, if they can't muster just a little bit of enthusiasm, the dollar is likely to sink to 93.88 (60-minute, a=97.68 on 6/1), short-term. On that basis, this vehicle would be a 'mechanical' short from 96.40, stop 97.24.

The selloff of the last two weeks may feel significant, particularly if you've been watching it unfold on the intraday charts. But take a look at the weekly chart: So far, the move has surpassed only a single 'internal' low. DXY would now need to take out a second low at 93.25 to hint that something more interesting than a garden-variety correction is in progress. Keep in mind also that the move beneath that low would have to occur without an upward correction along the way in order to suggest there's bear-market power behind the selling. _______ UPDATE (May 13, 7:59 p.m. EDT): Uh-oh. A minor, downtrending ABC pattern targets 93.20, and although I see a tradable bounce from that number, the damage will already have been done relative to the 93.25 'external' low noted above. _______ UPDATE (May 28): My 93.20 target missed the 93.16 bottom of a very powerful rally by four cents.  DXY has since hit 97.78, and although there was no discussion of this in the chat room, I trust that the target was useful to at least some of you. Please give me a shout if you hold a position based on my forecast.

Could this be the first crack in the dam? Homebuilder D.R. Horton's shares have gotten schmeissed in the last two days (along with Lennar and Pulte Group), as the accompanying chart attests. Recall that the implosion of homebuilder stocks that began in the summer of 2005 led the stock market's collapse by more than two years.  We ought to pay close attention in any case, since shorting the shares of Beazer, Horton, Lennar and other homebuilders back in 2005 was the best and easiest way to have profited from the Great Financial Crash. If this selloff is similar to the earlier one, it will give way to a secondary top achieved via a steep rally. For now, however, look for a short-term bottom at exactly 25.11. If this Hidden Pivot is easily exceeded, or if the stock closes below it for two consecutive days, it will be time to unfurl the yellow flag. _______ UPDATE (May 6, 11:26 p.m.): An opening-bar dive exceeded the 25.11 pivot by a whopping 17 cents. Even though the day ended on an upswing -- a bullishly impulsive one on the lesser charts -- the damage has been done. My immediate outlook is for more slippage to at least 24.41, a Hidden Pivot support (A= 28.97 on the 60-min chart on 4/21) that can be bottom-fished with a stop-loss as tight as 7 cents. Our goal would be to rack up some gains on a bullish trade that could cushion a stop-loss the next time we try to short this cinder block. _____ UPDATE (May 7, 11:24 p.m.): The stock rallied out of range yesterday.  Let's wish buyers the best, since we're looking to short this dead duck at the highest price possible.

Oscillating lazily between 96 and 100, the dollar has been consolidating gains racked up over an eight-month period. The rally, which began last July, saw this vehicle rise by 25%, to a recent high just above 100.  Is it recharged for another huge leap?  My gut feeling, looking at the daily chart, is that at least another week or two of corrective action is needed to set the stage for a strong resurgence. Even so, if we are tuned to the lesser charts, looking for the very first sign of this, it would come with a print on Friday at 97.97 (see chart). Then, if the rally were to continue, pushing past p=98.65, that would strengthen the case. FYI, my long-term forecast calls for a powerful move, over several years, to highs near 120 that were recorded nearly 15 years ago.  If and when that occurs it will be a very different world -- one in which, presumably, deflation has triumphed ruinously.

It's no coincidence that the stock market's steep rise in February began just days after an equally steep rise in the dollar stalled in late January.  The dollar has been moving sideways ever since, extending a monotonous sine-wave correction that is setting up the dollar's next powerful rally. It projects to at least 96.30, a relatively modest move of about 2% that would leave DXY a tad shy of  a small but technically important peak at 99.25 recorded in August of 2003 (see inset). The dollar has already blown past a more significant 'external' peak at 99.25 from 2005, so it's got nothing to prove. But if the next upthrust eventually exceeds the 96.30 target as I expect, it would add a robust new dimension to the bull market begun in earnest last year.  It would also put considerable pressure on U.S. stocks, perhaps even ending February's joy-ride on Wall Street. _______ UPDATE (February 26, 10:15 p.m. EST): Yesterday's sharp rally generated a bullish impulse leg on the daily chart. If this is the breakout we've been waiting for, a run-up to 96.58 is imminent. If DXY needs more time to  consolidate, look for oscillations around a midpoint pivot at 94.92 in the day ahead (daily chart, A= 92.15 on 1/21). _______ UPDATE (March 6, 12:04 a.m.): DXY popped to 96.59 (see inset, a fresh chart), a penny from the target identified above a week ago. Any higher would imply bulls are eager to take on the 99.25 peak also mentioned above. A move through it within the next few weeks would imply the dollar bull is just warming up. _______ UPDATE (March 15, 11:32 p.m.): Bulls proved unstoppable once again last week, pushing above the 99.25 'external' peak with no evident strain. This has further extended the impulsive rally

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.

Friday's sharp reversal occurred within 2 cents of the 88.29 rally target shown. This Hidden Pivot resistance is a relatively minor one in the context of the powerful bull surge begun last summer from 79.74. Even so, I expect DXY to fall to at least 87.14 before it can find traction. If that 'hidden' support fails to hold, however,the next opportunity for a reversal would come at 86.84. However long the correction lasts, the long-term charts suggest that the next thrust will carry to 91.48. That would exceed two important peaks at 88.71 and 89.62 that were recorded, respectively, in June 2010 and March 2009.  It would also hold very bullish implications for the dollar going forward, since it would create a very powerful impulse leg of weekly chart degree. The last time this happened was nearly 15 years ago.