DXY

Although we were using a somewhat higher target at 103.50 for this dead-cat bounce, the fact that it reached the green line at 102.80, triggering a 'mechanical' short, warrants shifting our focus once again to the downside D Hidden Pivot at 93.55.  That would amount to a 21% correction off the 114.78 summit recorded in September 2022.  Keep in mind that although the decline has already taken a brutal toll on the biggest, deepest, most important 'commodity' in the world, it is still merely corrective of the long-term bull market begun in March 2008 from 70.70, and of a shorter cycle begun from a 89.21 high in January 2021 that projects to 119.37.  Here's a chart stretching back to 2004 that shows this. Pivoteers will notice that DXY would trigger a 'mechanical' buy that could not miss if and when it comes down to the green line at 96.03. The next big rally cycle would be congruent with the debt deflation that I have long predicted. It will surprise everyone because it is so counterintuitive when seen in relationship to the unprecedented fiscal and monetary blowout of the last five years. However, it will nonetheless wring the life from all who owe, creating a wave of private, public and corporate bankruptcies worse than the cascade of bank failures during the Great Depression.

I'm not a big believer in this rally, so I've used a modest pattern to project a potentially important top in the uptrend, now three weeks old. It is slightly lower than a 103.50 projection given here earlier that was related to some previous highs. I'd suggest shorting at D=103.24, but there may be a 'mechanical' buying opportunity first at x=100.50. If it sets up correctly with a low-risk, reverse-pattern trigger, plan on a one-level ride but no more.

Every dog has its day, so perhaps that explains why bowser has been forging higher since mid-July. The pattern shown projects to at least 102.18, but we'll need to see how bulls handle the resistance before we are able to judge whether the rally will get legs. Judging from the way a hypothetical 'mechanical' buy at the red line (p=101.37) took off without probing any lower, DXY appears to be a very strong bet to blow past D=102.18. Speculative call buying is warranted, although I am unable to provide precise guidance ahead of Sunday evening's opening. ______ UPDATE (Aug 2, 9:19 p.m.): A fresh impulse leg on the hourly chart promises to keep this rally going, presumably to a test of highs near 103.50 recorded in late June and early July.

The Dollar Index has bounced nearly precisely from p=99.72, just as we'd been expecting since March. I wouldn't get too excited, however, since nothing has changed in the big picture to reverse the greenback's long slide. The outlook would brighten somewhat if DXY vaults a minor midpoint resistance at 101.20 where it stalled last week. That's the midpoint Hidden Pivot, on the 60-minute chart, of A=100.02 on 7/20. The rally target thereafter would be 101.67.

The dollar was plummeting when the week ended, so I've changed the view to graphically display a 99.72 target we can use as minimum downside objective for the near term. It is tied to a 'D' target at 93.55 given here previously that would equate to an 18.5% drop in the Dollar Index since it topped at 114.78 last September. This would leave it just a tad shy of 'official' bear-market territory, but considering the size of the market for dollars, it has suffered damage commensurate with a Category 5 hurricane. The dollar will have its day eventually when debt deflation rears up, but until then, debtors should be relieved that a strong dollar is not compounding their problems from higher interest rates. _______ UPDATE (Jul 15): Last week's hellish plunge brought the Dollar Index down to the 99.72 target almost precisely. This is the midpoint Hidden Pivot support of a pattern projecting to as low as the 93.55 target noted above, and it must hold like a rock if the dollar is going to avoid diving anew in the months ahead. _______ UPDATE (Jul 18, 6:29 p.m.): The support is holding, but only barely. It is not a bullish sign that sellers have been pounding on it for a week.

The Dollar Index rallied just enough last week to trigger a 'mechanical' short at the green line (x=102.80). The trade is predicated on further slippage to at least D=98.71, the target of a bearish pattern measured from November 2022.  Just to get on record with this, there is room for even more weakness down to as low as 93.55. That's a Hidden Pivot support derived from a higher point 'A', the 113.15 peak recorded a couple weeks earlier in November 2022.

What looked like the start of a promising rally in early May turns out to have been just a drum-roll for yet another head-fake. The uptrend was mildly impulsive on the lesser charts at first, but the end result was a 'mechanical' shorting opportunity at the green line (x=104.09). This implies the Dollar Index could fall to D=98.71 before it finds a foothold. This should be at least slightly bullish for bullion, but we've seen that the effect is often so feeble as to be negligible.

The rally of the last two weeks has gotten past four small 'external' peaks without taking a breather, so this could be the start of a sustained move. There hasn't been one since earlier this year, but this one looks capable of reaching a minimum 105.85. That's the 'D' target of a reverse pattern begun from 100.82 on February 2. As always, an easy move through a D Hidden Pivot would suggest bulls are not yet finished. Potential thereupon would be to 110.95 (daily chart, A=104.64 on August 10). Gold bulls should take note, since an extended rally in the dollar would put downward pressure on bullion.

Using a longer-term chart has somewhat raised my minimum downside target to 99.72 from the 98.71 objective given here earlier. This midpoint Hidden Pivot support warrants close watching, since its failure, especially if decisive, could portend a move in the U.S. dollar from purgatory into the first circle of hell. A fall all the way to the 93.55 target would stoke inflation while giving gold and silver a strong boost. The A-B leg of the pattern is legitimately impulsive, and so we should expect it to give us an excellent read on the forces acting on the dollar.