Dollar Index - Downtrend remains In Force

DX was soundly rejected by a combination of the PIVOT at 80, the 200 DMA and the upper boundary of the Pitchfork.

For now the onus is on the DX bulls – they need to prove this is not just a temporary setback in retaking the 80 level within a short timeframe.

As discussed earlier, the Dollar downtrend remains in force until it can work its way over the 80 level.

The Elliott wave count below portends some very bearish outcomes for the Dollar. Wave 3 of (3) of III will send the Dollar plummeting and Risk assets rising, if Dollar bulls cannot get their act together.

Charts - Framing the Markets

A falling dollar index, if it breaks below 72.5 ….

 

…. could provide SPX with the needed impetus to clear the resistance zone (1275 to 1350) formed by the 200 DMA, H&S neckline and downtrend channel resistance

 

Could we be on the launch pad for III of (III) for SPX? Stay tuned ….

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From: Friday, October 14, 2011

Dollar Index Technicals

For the bull case targeting 100:

•  The TENTATIVE uptrend channel in GREEN needs to hold
• DX needs to close ABOVE the 80 pivot line in BLUE
• For this move to be anything other than a correction of the downtrend established last year, DX needs to get ABOVE Andrew pitchfork in RED (again, around 80)
• Then it needs to break ABOVE the GREY downtrend channel to get seriously bullish

The action around the 80 pivot line could continue in a multi-year contracting triangle, reflecting the alternating concerns between the finances of the US and the Eurozone sovereigns.