NYBOT Dollar Index

DXY has reversed sharply after having failed to achieve the top of the 74.97-75.04 pullback range I'd flagged. This suggests that the rally will have legs -- most immedfiately to get it to a 76.16 target that is the  closest important Hidden Pivot on the hourly chart. The midpoint lies at 75.81, so anything above it will foretell more upside. (Note: This corrects my earlier analysis, which was derived from a TradeStation chart that had failed to refresh.  I have found this to be a problem with the TradeStation platform, especially when I was trading off a chart, unaware that the last price displayed was an hour old.)

The Dollar Index seems all but ordained to bounce from within the range 74.97 - 75.04, so currency traders and greenback aficionados should take heed! If the index reverses to exceed 75.43 without first achieving 75.04, take it as a sign that bulls are about to romp for a few days and possibly longer.

I didn't look at the dollar earlier tonight because I had assumed it would be dead-cat bouncing off the 75.45 pivot that worked so well earlier in the day. Lo, it's 1:23 a.m., and DXY is doing a zombie-walk toward the edge of a cliff. We all knew that Bernanke, Geithner and friends had ceased to even pretend that they want the dollar higher.  Not that they don't -- only that merely saying so no longer triggers even a heartbeat, much less the kind of rally that could panic shorts. The powers that be evidently have decided that it's better for the dollar to take its course than for the central bankers to be perceived as powerless to do anything about it.  Nor would our ostensible allies have their hearts in it if they were asked to say a kind word for the dollar. From a technical standpoint, the next Hidden Pivot with the potential to reverse the trend, albeit probably only briefly, lies at 74.36.  If it gets shredded as quickly as the one at 75.44, however, our major target at 72.93 could be achieved much sooner than we had imagined.  At the moment, DXY has not yet leapt into the void; it is just probing for traction not far beneath Wednesday's lows.  That is why gold has not yet taken off.  But if the dollar should slip even a teensy little bit from here, the December Comex contract will be banging against our 1074.50 target in a New York minute.

Look for the weakness to continue to at least 75.45, a clear Hidden Pivot that seems likely to provide a precise bounce.  The bounce would be tradable if you are playing the dollar vs. euro, yen or pound. Alternatively, a print today at 76.18 would signal a bullish reversal worth buying.  Your entry would enjoy camouflage if the impulsive a-b thrust does not exceed 76.18 by more than 3-4 ticks. ______ UPDATE (3:30 p.m.):  A 75.44 low held for most of the day, until a fright-wig selloff punched out a new low at 75.34. Is that the best Da Boyz can do to impugn the target?  For the record, the original target would have provided a nice trade, since DXY rallied 25 cents from within a penny of it.

A 72.93 target first broached here a while back is still very much in play and will remain so unless DXY can push above the target's sibling midpoint at 77.20 and stay there for at least two days.  More tentatively, a push today exceeding 76.71 would suggest a bullish reversal with at least minor-league potential.

The fact that the dollar has friends in high places, not to mention rumor-mongers to help out whenever the going gets tough, doesn't seem to be providing the kind of lift the casual observer might expect. Minor rallies have gone nowhere, and they are being met with minor impulse legs going in the opposite direction.  The intraday charts don't provide much clarity, but the daily bars suggest DXY is struggling to avoid the 75.47 target we flagged here a short while ago.  Keep in mind that if that Hidden Pivot gives way easily, the next scientifically determined stop on the way down would be 72.93, another number we have in play.

The midpoint support at 76.7o gave way early in the session, telegraphing the weakness that was to follow. Its 'D' sibling at 76.31 is now our minimum downside objective, implicitly supporting the bullish outlook for gold.  The dollar's weakness can be seen as punishment for the bucket of manure served up by G-20 in their brazen "Mission Accomplished!" statement after last week's wallow in Pittsburgh.  Please note that if the 76.31 hidden support fails, DXY will become a good bet to fall to exactly 75.47, and quickly. A tradable bounce from that number is very likely, so gold and currency traders should take heed.

The dollar's recent low missed a Hidden Pivot target that I'd drum-rolled in my commentary by just 26 cents. I offered no target for the current DXY rally, but keep in mind that once it ends, I expect DXY to plummet all the way down to _____.  Moreover, DXY's rally may just be getting started because the initial reversal off the 75.83 low (versus a 75.47 target) has had no problem generating bullish impulse legs on the hourly chart.  If true, this would mean gold will remain under pressure for a while -- perhaps another 7-10 days. The good news is that it is already under pressure but still able to home in on $1000 nonetheless. If $1000 is cruising altitude, as would appear to be the case, that's good news for long-term bulls.

The Dollar Index on Friday ended the day with a bounce from the exact midpoint support of the pattern shown in the chart. It would need to rally today to at least _____ to suggest bulls are back in charge. At that point they would be presumed capable of propelling DXY to as high as _____. Key resistance on the way up would come at _____.