NYBOT Dollar Index

The Dollar Index has picked up support from some too-obvious lows made a week ago, but the damage was done earlier in yesterday's session when DXY crashed the 79.25 midpoint support of the pattern shown. This implies more slippage over the near term to at least 78.10, the midpoint's 'd' sibling.

The nearest rally resistance lies at 80.72, a Hidden Pivot whose provenance is shown in the accompanying chart.  Judging from the way DXY shredded its sibling midpoint at 79.35, it seems highly likely to be reached and should therefore serve as a minimum upside objective for the near term. If the target gives way easily, however, we should raise our sights to at least 81.80, a 'D' target realized by using the November 4 bottom as our point 'A'. _______ UPDATE (12:03 p.m. ET): DXY sold off for six hours after topping within 0.07 points of the 80.73 target. They then embarked, almost without pause, on a rally that has reached 81.14 so far. The clear implication is that DXY is bound now for a minimum 81.80.

The pullback from last week's 79.46 high will need to come down to at least 77.82 -- 0.34 points beneath the so far correction low -- for this vehicle to be considered properly recharged for a second bull leg.  Anything could in fact happen, but we'll let the burden of proof continue to rest on the bulls, since, after all, it is the illusion of a flying pig that they will be attempting to sustain.

With yesterday's seemingly tireless rally, the Dollar Index pushed past a third prior peak on the daily chart without having paused for breath.  This created an ostensibly bullish impulse leg; however, for the time being I will treat it as a trap rather than as technical evidence that pigs can fly.  From here it will take a stiff pullback to terminate the impulse leg, given the dramatic length of the k-A segment.  In any event, we'll move to the sidelines, whence we can judge the dollar's prospects with cool detachment.

Close but no cigar.  As noted here earlier, the Dollar Index's purely technical rally will have to surpass 78.69 to temporarily elevate itself above "wuss" status.  My hunch is that it will do so sometime today or tomorrow, earning our bemused attention if not our respect.

It's quite a challenge for me to keep from trash-talking the dollar, since I admittedly lack the imagination to find an even remotely plausible reason for it to rally -- other than a purely technical one. Be that as it may, yesterday's logic-challenged thrust surpassed the first of three peaks on the daily chart that will need to be dispatched to clear the way for an intermediate-term rally of perhaps 3-4 weeks.  Accomplishing this would require a mere puddle jump to 78.70, just 0.41 points above yesterday's 78.29 high. This modest feat seems a foregone conclusion at this point but we'll hold the one-handed applause until such time as it actually happens.

Yesterday's rally was strongly impulsive on the hourly chart, but since it is a flying pig whose behavior we're measuring, we should want to make doubly certain of the bulls' resolve by requiring an  impulse leg on the daily chart.  This will require a thrust exceeding the 78.69 peak shown in the chart. We've referenced the peak before, but two rallies so far have failed the test.  The third time may be the charm, though, and if DXY succeeds, we'll be dollar bulls for the time being, like it or not.

The Dollar Index looks poised Sunday night to push moderately higher, to a Hidden Pivot resistance at 77.13 that was visible on all of the intraday charts.  So that we don't mistake a fake rally for the real McCoy, let's stipulate that DXY must shred two more peaks -- respectively, at 76.98 and 77.42 -- with an unbroken rally before we get excited.  Both can be found on the accompanying chart.

Set a screen alert at 77.93 today just in case, since that's where the Dollar Index would warn that it's preparing to take flight. A print at that price would create an impressive bullish impulse leg on the hourly chart (shown).  Immediately below these levels there are no Hidden Pivots of significance -- only the visually evident promise of support near 76, where DXY bottomed in mid-October.