NYBOT Dollar Index

The Dollar Index head-faked yesterday morning before plummeting to within 0.11 points of the 85.41 Hidden Pivot we were using as a minimum downside objective.  Any lower would portend 85.01, or perhaps 84.91. The 85.41 pivot itself remains valid as well and could evince a bounce, since it remains unbroken as of this writing. ______ UPDATE:  The Dollar dove anew today but still  couldn't break the 85.41 hidden support.  The low was 85.45 before DXY rallied to a so-far recovery high of 85.77. My hunch is that the support will give way on Monday. When it does, look for a new leg down to exactly 85.01.

Backed into a corner by Europe's unexpected move toward austerity, an intrinsically worthless U.S. dollar is not giving up without a fight.  It will have a couple of chances to dig in its heels -- at 85.41, my minimum downside objective for the near term; or if not there, at 85.01.  These are both Hidden Pivot supports extrapolated from a 180-minute chart, which has been reproduced alongside. _______ UPDATE:  DXY dive-bombed the Hidden Pivot support once again, this time getting even closer with an 85.45 low. As before, a breach will spell more downside to 85.01 precisely.

Someone in the chat room wondered yesterday whether the dollar's strength might be ebbing, but look at the chart yourself and cease to wonder.  I see only a consolidation for a push to at least 89.62 that, once it gets started, will be impervious to supply. Gold has more than held its own during the dollar's curious run-up, and so we shouldn't be too concerned about the prospect of yet more strength in its paper nemesis.

Although the Dollar Index has spent the last two weeks meandering sideways, it has nothing to prove at this point, since the heavy lifting has already been done.  This was true  a week ago, when DXY stabbed above a key peak at 86.87 recorded in April 2009.  The consolidation from the recent high at 87.46 could come down to as low as 82.86 without disturbing the long-term bullish case at all, but in any event, another powerful leg up would be signaled by a "booster-stage" rally of 1.86 points.

The Dollar Index has met all of the tests we proposed for it earlier, earning the presumption of more upside to at least 90.06, or possibly to 92.48.  In the meantime, bulls have gotten traction Monday night with the creation of a fresh impulse leg on the hourly chart that had eluded buyers during the regular session. This portends more upside over the near term to match -- and possibly exceed -- last week's 87.46 peak. _______ UPDATE (11:46 a.m. EDT):  As expected, a very powerful rally has pushed DXY to a so-far high today at 87.45 -- a single tick from our first target.  Still-higher prices appear likely, since buyers showed no timidity in approaching last week's imposing high.

The Dollar Index has just embarked on a fresh, bullish impulse leg with immediate upside potential to 87.99, the Hidden Pivot midpoint of the pattern.  If it breaks loose, however, and closes above that number, that would imply more upside over the near term to as high as 90.06.

The 85.67 rally target given here yesterday was about as high as the intraday charts can take us, and it is all but guaranteed to show some stopping power if and when DXY gets there. However, the trend could fail anywhere beneath it -- meaning that yesterday's 85.27 high could prove to be an important top.  We should nonetheless remain open to the possibility that a 92.48 target on the weekly chart will eventually be realized. This looks like a longshot to me at this point, but the odds would shorten somewhat  if  86.87 should be exceeded without the occurrence of a b-c pullback.

Yesterday's high came within 0.06 points of a compelling Hidden Pivot at 84.25 (see chart), so we might look for a top here of at least intermediate importance.  If the Dollar Index simply continues higher, however, the next place where we might look for a tradable top would be at 85.67, a Hidden Pivot found by relocating point B up to 82.24.

Yesterday's high at 82.71 came within a nickel of a well-defined Hidden Pivot, so that could be it for a while.  If not and the Dollar Index moves higher over the next day or two, we should infer that the 83.59 target of the larger pattern shown in the chart is in play.