NYBOT Dollar Index

The Dollar Index has bounced, so far feebly, from within a hair of a minor, 73.82 support noted here on Friday. Although I seriously doubt the move will go anywhere, I monitor minor Hidden Pivots nonetheless because their resiliency, or lack of it, can provide useful clues concerning the longevity of the long-term trend.  In this instance, were DXY to close for two consecutive days beneath the more important Hidden Pivot at 73.51 also flagged here, I'd infer the 68.36 target of the long-term pattern shown in the chart would be well in play.  I've displayed it using intraday bars because I think the overall look of the pattern in this context is more persuasive than on the daily or weekly charts.

We briefly entertained the notion that the Dollar Index, for whatever arcane reason, might be bottoming at 74.48, a crystal-clear Hidden Pivot support. Alas, the support has crumpled after a not-very-impressive rally, proving that garbage is garbage and notwithstanding whatever byzantine theories have been employed to suggest that the dollar was due to strengthen. That said, this flotsam will have a chance to turn from 73.51, a major Hidden Pivot that appears all but guaranteed to produce some sort of bounce. Currency traders take heed -- and of course avoid long positions in other than dollars if and when the target is reached. One final note:  A lesser Hidden Pivot at 73.82 could produce a bounce .

The dollar has been getting savaged lately, but please note that it is within pitching wedge distance of a compelling Hidden Pivot support at 74.48 (see inset). Currency traders should keep close watch, since it's hard to imagine that DXY will not take a tradable bounce from within a few ticks of that number.  Accordingly, scalpers should prepare to short the euro and yen with very tight stops when this happens.

Friday's nasty head-fake sputtered out two ticks beneath the 76.63 Hidden Pivot I'd flagged as a rally target last week. The thrust conspicuously failed to get by a look to-the-left peak recorded several weeks earlier on the way down, furthering the suspicion that buyers are lacking in guts, enthusiasm or perhaps both.  In any case, the burden of proof will remain with the bulls.

Some good technicians and a few world-of-finance celebrities have been talking bullish talk on the dollar (although I'd probably have to replay the Jimmy Rogers tape a few more times before I'm certain of where he stands).  Anyway, this tout is to reiterate my conviction, based solely on Hidden Pivot dynamics, that the dollar is going nowhere -- or at least, not significantly higher -- for the foreseeable future.  To underscore the point, it recently spent three full days in distribution below a not-very-intimidating peak at 76.46 notched on St. Patrick's Day. That pretty much says it all, for now.  Yes, there is always the possibility of some black swan event panicking the world's hot money into the misconceived "safety" of the U.S. dollar. But if the threatened ruination of Japan and the conflagration in the Middle East are not the black swan, then it's pointless trying to imagine what would be.  Putting the foregoing aside, if DXY can close for two days above the 76.15 midpoint of the pattern shown, we should infer it's on its way to at least 76.63 over the near term.

All of yesterday's gratuitous chop took place beneath a not-very-initimidating peak recorded on St. Patrick's Day, casting doubt on buyers' resolve -- the moreso because they had the wind at their backs from the central banks' interventions against the yen.  I'm inclined to write off any seeming strength in the dollar as a flash-in-the-pan, but we should nonetheless remain open-minded to the possibility of a modest pop above 76.46 that would reinvigorate the hourly chart.

The dollar is having too much trouble sustaining altitude to suggest that a big bull move lies ahead.  We first diagnosed incipient weakness during Wednesday's tutorial session, but yesterday's oh-so-tricky feint higher on the opening adds to the evidence of distribution. We won't give DXY last rites, at least not yet,  but it'll need to pop to at least 76.67 over the next couple of days to avoid succumbing to gravity. Most immediately, though, yesterday's weakness points toward 75.35, (60m, A=75.89, B=75.46) predicated on the failure of a 75.65 midpoint support.

The Dollar Index has put in a tentative bottom almost precisely where we'd expected it. The initial impulse leg projects to 75.69 -- a target that would appear to be a lock-up, since DXY has gapped through its sibling midpoint, 75.53, as evening trading has begun. It is too early to say whether this bullish trend reversal will have legs, but the forecast anticipated a potentially powerful move. We'll be better able to tell once we've seen how DXY handles the 75.69 target.  If it pops above 75.88 today, though, exceeding a minor peak recorded March 18 on the way down (60-min), bulls will be solidly  in charge, at least for the near term.

Yesterday's weakness brought the Dollar Index down to within a hair of the 75.27 Hidden Pivot flagged here.  There is yet another slightly below it, at 75.18, and my expectation is still for a trend reversal from very near these levels.  Even so, the "Chopped Liver Rule" should be applied in assessing the strength of the downtrend. It states that because a Hidden Pivot is "not chopped liver," as the saying goes, we should always expect a discernible trend change when a trading vehicle hits one.  If there is in fact no visible change of direction, then we should infer that the existing trend is quite powerful -- powerful enough to make it appear as though the Hidden Pivot where we were expecting a trend reversal is not even there.  Thus, if 75.18 fails to hold, it would be a bearish sign going forward, and the next place we would look for a low is at 74.44, minimum (see chart).  Since odds of at least a minor trend change from current levels are pretty good, traders should be prepared to leverage bullish "camouflage" patterns aggressively (but with the usual tight stops) on the five-minute chart or lower.