NYBOT Dollar Index

The presumptive correction begun a week ago has further to go, since yesterday's weakness violated a midpoint support.  The 'D' target to which it corresponds lies at 82.38, which if achieved will equate to a pullback of 1.1%.  Alternatively, bulls would be back in charge instantly if they can muster a pop today exceeding the external peak at 82.94 labeled in the chart.

The bullish trend swung to a 'duel' between bulls and bears Friday with the creation of the bearish impulse leg I've highlighted in red. My hunch is that the news from Cyprus will arrest the selloff via a resumption of the dominant uptrend. If you're looking to catch a ride, I'd suggest leveraging camouflage opportunities to be found at 'x' on charts of 15-minute degree or less.  If the next stab takes out the labeled peak at 83.51, bulls will gain locomotive force. ________ UPDATE (March 25):  The vicious chop of the last two weeks looks to be a consolidation for a test of August's highs near 84. Any impulsive thrust that clears August 2's 83.51 peak will imply that bulls are likely to surpass those highs without much trouble.

Dollar bears seem to be growing bolder these days, so let me reaffirm my bullishness. Notice in the accompanying chart that each new upthrust since early February has 'refreshed' the bullish energy of the rally by creating an unbroken series of new impulse legs.  This is not only how robust rallies signal more of the same, it is also how they provide tradable opportunities for us in the form of impulsive A-B legs that give rise to 'x' entry signals. In the chart shown, the current pattern looks capable of delivering sufficient thrust to get DXY to a test of August's 83.51 high.

In the chat room yesterday, someone mentioned that Shadowstats' John Williams is looking for a selloff in the dollar.  From a Hidden Pivot standpoint, however, there is no reason to expect this. The daily chart (see inset) shows how very robust the rally from early February's lows has been, with each new thrust exceeding a prior 'external' peak. Although it's possible this  dynamic is about to end with the failure of DXY to push above the labeled 82.88 peak on the next burst, this looks unlikely. If that burst does indeed surpass the peak, it would signal an almost certain test of last July's 84.10 summit. Perhaps Williams has been seduced by the fine looking head-and-shoulder pattern begun in October 2011?  I don't put much store in such patterns, however, because they are everywhere you look for them.  We shall see. But if you're positioning yourself for a reversal of the long-term bullish trend, I wouldn't bet too heavily on it.  Click here to sample Rick's touts free for a week.

The daily chart has gone impulsively bullish with Monday's sharp thrust, suggesting happy days lie ahead for dollar longs. There's not much to grab hold of yet for the next leg higher, but as you can see in the chart, this vehicle has stalled at the p resistance of a lesser pattern. I'd suggest using a 'camo' entry strategy if you're eager to play, but you should wait for more backing and filling -- which is to say, for more point C-low stop-outs -- before you leap. There's a risk of missing the trade that way, but DXY looks too menacing right now to mount after so shallow a pullback.

The hourly chart went impulsive last week, but there's no excitement yet on the 'daily'. In fact, the duel between bulls and bears looks like a draw at the moment, suggesting the dollar could slog sideways for a while before making a presumably minor move higher.  The trend has been up for nearly three months, but it has been unimpressive and looks like it wants to remain so.

On the daily chart, the impulse leg begun on Halloween is still uncorrected. Now, it is but a distance to the two 'external' peaks shown (see inset), and a leap that surpasses both without a pullback would offer strong evidence that this rally is only just getting off the launcher.  I've set a screen alert, so stay tuned.

Is the euro's dead-cat bounce near an end? There are hints of it in the Dollar Index's hourly chart (see inset). Notice how yesterday's fleeting upthrusts marginally exceeded October 1's high, refreshing the bullish impulsiveness of the chart as we should expect if the uptrend is going to continue. Let's use the 80.53 target of the pattern shown as a minimum objective. If it's reached -- or better yet exceeded -- the case for a resumption of the long-term bull trend would strengthen, as would the implication that the euro is finally back on track for a fall to 1.08, my long-term bear-market target.

The euro's dead-cat bounce may be near an end, given that the Dollar Index is approaching a Hidden Pivot support at 79.75 (or 79.12 if any lower) that looks likely to produce a strong bounce.  The relevant pattern is shown in the chart, and I'd encouraged traders to leverage it with any vehicle that correlates to an uptrending dollar. Note that if DXY breaches the first target, a second not far below it would be in play.