CLIFF NOTES: the dollar has gone up – strongly — at the BUY pattern. While this is good, for now, as you will see below here will be the real test (IMHO). Here is the last post on the Dollar Index: http://bartscharts.com/2014/04/30/the-dollar-index-is-at-a-very-crucial-and-critical-level-at-79-45-79-47/ I have labeled the potential count occurring if dollar bull thesis is correct. I am impressed (hopeful ?) that all that thrust DOWN into the pattern was defeated (so to speak) but we have another SELL pattern coming in so if we can bust thru that then probability favors a dollar rise. Stay tuned …
CLIFF NOTES: I have been a dollar bull for almost a year now and while price has made higher highs on the longer term time frame, it sure looks sick on a daily. So to the drawing board I have gone …and, while you will see a very nice an orderly count down into 5 waves, what I decided to do is label the bottom wave a (1) meaning this entire consolidation which I think has kicked a lot of people in the rear (bulls and bears) is making a big multi year triangle and it’s, ultimately, going to crack the dollar wide open. Not good …
HEADS UP – we have completed a bullish BUY pattern on the dollar index right at the multi month trendline at 79.45-79.47. But caution is warranted as the THRUST into this level is very bearish. If this pattern fails then leg “d” has begun into the 76 level, and we need to come to the realization that the dollar has potentially entered a very bearish scenario. Now, I fully expectedus to be zooming away in a C wave up to the mid 90’s as shown but the C wave is described as being “a beauty to behold” or “devastating in nature” w/ thrust and momentum that GOES. Can you say that the chart is telling us that for the last 1.5-2 years it’s been a rocket ship? No chance …this has been one dead puppy. And the “visual” weight certainly looks like she might break the trend line.
here’s one look at the long term Monthly RSI w/ the bearish resistance bands on the RSI noted. As you can see the BIG POP up never transitioned above the bearish resistance zone. The RSI will tell us when the trend has changed … since the POP it’s made lower highs and just broke the trend line that had held the RSI as support …
Note the UUP ETF below … folks, as far as PATTERNS go there isn’t a better set-up. NOTE the .886 retrace held it as resistance so MAYBE it will hold it as support? Either way, if we break down below 20.84 look out below. The UUP BUY was such a nice pattern.
BOTTOM LINE: watch the BULLISH BUY pattern .. with this much slumping and also the BIG CANDLES that came crashing into the pattern today if the dollar can with stand this push THEN it will be impressive. Have to put my big boy technician pants on perhaps throw in the towel on my BULLISH DOLLAR thesis that I have clung to for 1.5 years.
The Dollar and the Currency Market is, again, the Gorilla in the corner juggling dynamite. Per our last post (http://bartscharts.com/2014/02/19/dollar-index-positive-reversal-forming-on-daily/) we mentioned a potential positive reversal (which has been defeated) and one more target lower in/around 79.53-79.60. This is EXTREMELY important for the thesis of the Dollar moving up …
today, they CUT RATES and the dollar index took off like a rocket ship. having had the wonderful experience to gain the CMT and then teach the capstone course for the CMT Level III for a while it was burned into our head that the dollar, while somewhat of a wild card will, in fact, STRENGTHEN in a deflationary environment. Sure looks like that is the case .. but now I’m going off into fundamental nah nah land (it’s not nah nah land for most of you, just me. as my skill is advanced pattern recognition which, unfortunately, is nah nah land for the people reading this. so in the end, we are all in nah nah land. I digress ..)
of note today, the US Dollar Index exceeded it’s largest corrective move since July of this year …while a pullback in the dollar is expected (perhaps intraday) I would look at this as an opportunity to add to the position. additionally, from the below charts expect resistance on the way up in/around 82, 82.50, 83.50. believe we are going to take this trip into the low 90’s. THEN THAT IS WHERE IT WILL GET VERY VERY INTERESTING …
in our last post we discussed the importance of current levels on the dollar or the 78.73 level a little lower. in “counting terms” believe the dollar is carving out a major bottom in what can be coined an expanded flat corrective move. if this analysis is correct, I am expecting a major move on the dollar…
the EURO has completed a major retracement, the POUND needs a little higher or right in here, the YEN finished a sell pattern, the SWISS hit a weekly pattern (or perhaps a little lower to the .382) and mulitple other pairs via the USD are showing the potential for a major dollar low in place. what else?
Commitment of Traders (COT): Non-commercial large futures traders, including hedge funds and large International Monetary Market speculators, cut their overall US dollar long positions to a total of $692.8 million as of Tuesday October 1st.
Here’s the data in chart form …
here’s the dollar index using red arrows to show the BEARISH and the blue arrows to show the BULLISH positions. NOTE, at the extremes the opposite happened w/ regard to price.
now, when we take a look at the the EURO we’ll see a pretty amazing picture w/ the net positions shown but this time w/ a price of the EURO vs USD overlaid on top of the positions. here take a look …
note the price of the EURO vs the USD .. at extreme levels of BEARISH and BULLISH points, the price did the opposite. When the level of bearishness by the large speculators was extreme the EURO went up and when the level was bullish it went down. take note of our dollar index we have been following since the end of August …w/ everything being presented here and in the past, certainly looks like being a dollar bull in/around here is the side of the market to be on …
dollar index updated as of 9 PM EST 10/27/2013:
US Dollar Index Weekly
US Dollar Index Daily
here is the picture for the UUP w/ potential support points noted … also, believe if the low that we carved out on this chart is taken out by a daily close then all of this analysis is completely incorrect.
a couple days ago I posted about the US Dollar missing my lower target and the potentiality of a bottom and even saw a “nice” inverse head and shoulders that IF it broke thru would be a bullish signal. it didn’t and, now, looks like my lower target is going to be attacked. quite frankly, I’m glad … for over 2.5 months i have steadfastly WAITED and deployed NO CAPITAL. Always, thinking, “I missed it” or “why the heck did it do that” or any number of ugly “little voices” that appear. my mentors have banged into my thick head to ONLY invest at PRECISE levels because then and only then can we manage the risk. I’ve taken that to the extreme and, quite frankly, it’s my Achilles’s heal from an PM perspective. making no apologies. I think the tendency to try and “nats ass” levels is based on the HOURS upon HOURS that I spent in the Navy precisely aligning attack vectors for putting a 2000 lb pound in the center of a window from 35,000 ft at 1.2 IMN. old habits are hard to break ….
the other reason is because of a chart like below:
US Dollar Math and Geometry
if you take the time to STUDY the chart (and why not if your reading my post – thanks by the way) you’ll see the EXACT, again, EXACT measured moves at the low in 1992-1995 hit. so, in the context of WAITING 2.5 months for this opportunity to present itself, it’s really nothing in the context of 3 years. YES, there is and was a lot of money to be made day in and day out trading the swings. but you know what … I don’t like doing that. it doesn’t fit MY STYLE so I like to put the pieces of the puzzle together and deploy capital. So, this AM, let’s take a look at the pattern coming in on the US DOLLAR INDEX.
the key for me is the “measured move” correction like that of 05/2011. Bruce Buffer time … HERE WE GO
