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The dollar looks primed to move significantly higher, implying that U.S. stocks and precious metals will remain under
pressure for the foreseeable future. That doesn’t necessarily mean Gold and Silver cannot continue to rise against all currencies nonetheless, since the global monetary blowout that has caused them to ascend for more than a decade shows no sign of abating. However, whatever strength bullion musters in the weeks and months ahead will in dollar terms be tempered at
least somewhat by a resurgent
greenback. Recently, we called subscribers’
attention to a possible nascent bull market in the dollar via a trading
“tout” that recommended
setting a screen alert at 78.87, about 0.6 percent above
where the NYBOT Dollar Index was
trading at the time. Yesterday, the
Index spiked to within
3 cents of that benchmark, so
the baby bull has not yet been officially
confirmed. However, during an online tutorial session that
we conduct every Wednesday morning, we had
a chilling sense of bullish déjà vu when
we looked at the hourly chart of the Dollar Index. (Want
to be alerted in real
time to these changes? Click here
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‘round-the-clock, and to trading
recommendations and analysis
that are continually updated during market hours.)
The chart is reproduced above. The crucial piece of it, based on our proprietary Hidden Pivot Method, is the
77.52 peak achieved during Monday morning’s strong opening. Notice how that peak slightly exceeded an earlier one at 77.49, creating what in Hidden Pivot parlance we call a “bullish impulse leg” on
the hourly chart. The
implication is that any pullback such as the one that occurred yesterday represents a buying opportunity in expectation of a very
likely follow-through rally. We mention that the chart sent a chill down our spine because
the pattern is strikingly
similar to one from which the Dow Industrial Average emerged, in 2006, following a period that some
chartists may have viewed as a six-year topping pattern. As bearish as we were on the economy at that
time, the long-term bullish
implications of the pattern could not be ignored. Now, the same holds true
for the dollar, even though
the relevant pattern is occurring
on the hourly chart rather than the monthly. What it says – very clearly – is that the Dollar Index is about to leap to at least 79.86, or about 2.7% from
current levels. If so, it could
be just the beginning of a much larger move, since a print at or near
79.86 would create a fresh “impulse leg”
on charts of even higher degree (i.e., the daily chart).
Although we
never claim to have a crystal
ball, the inescapable
implication of a sharply strengthening
dollar is that Europe’s financial crisis is about to come to a boil. Traders
and investors should plan
accordingly.
Rick Ackerman
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Information
and commentary contained herein comes from sources believed to be reliable, but
this cannot be guaranteed. Past performance should not be construed as an
indicator of future results, so let the buyer beware. There is a substantial
risk of loss in futures and option trading, and even experts can, and
sometimes do, lose their proverbial shirts. Rick's Picks does not provide investment advice to
individuals, nor act as an investment advisor, nor individually advocate the
purchase or sale of any security or investment. From time to time, its editor
may hold positions in issues referred to in this service, and he may alter or
augment them at any time. Investments recommended herein should be made only
after consulting with your investment advisor, and only after reviewing the
prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements
and/or profit claims from its subscribers for marketing purposes. All names
will be kept anonymous and only subscribers’ initials will be used
unless express written permission has been granted to the contrary. All Contents © 2011, Rick Ackerman. All Rights
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