Monthly Dollar Index

After reviewing the quarterly chart of the Dollar yesterday it seemed that we needed one more decline from where we are now to fulfill the sequential countdown. Specifically, we can’t rally above 78.33 over the next two weeks (and close there) and then we must be back below 75.83 by March. We are at 76.87 today. How likely is such a price movement? A look at the monthly chart may help answer that question.

Within the context of the quarterly chart the rally in 2008 failed at TDST resistance. In the monthly chart the rally was able to rally above resistance and wipe the sequential slate clean. The decline from the March 2009 high has now persisted to the point where TD Setup bar #8 is about to print (as long as we close below 78.15 this month). To get a perfected buy setup this market would then have to drop to a new low and close below 76.72 in January.

And so, the monthly chart is confirming the quarterly chart in what has to happen before any buy signals are made. Combining the two we need to end December below 78.15 (which meets the quarterly requirement of 78.33) and then decline below 74.23 in the first quarter of 2010 while closing below 76.72 in January. Note that even if the monthly TD Buy Setup were perfected in January the reaction can take 1-4 bars to develop - and so it could mesh with a quarterly chart sequential buy.

Bottom line: Note that we are talking hypothetical price movement in order to reach longer term buy signals. Tomorrow I will look at the Weekly chart to see what the more near-term situation looks like.

Technical Analysis of for longer-term positions:

Dollar Index: Out. (0.65 point loss after 1 trade). We are hesitating just below resistance with a perfected TD Sell setup in place. If we can’t close above 77.05 quickly we are likely to see a pullback or consolidation develop.
World Gold Index: Long from 1139.20 on 12/16/09. 1101.20 appears to be holding as support. There wasn’t a TD Buy setup but there was an RSI/Composite buy signal with higher time frame charts bullish. Out on a close below 1101.20.
Cash SP500: Out on a close below 1085.89.
10 yr Bond: Neutral, waiting for a signal. It should be noted that the bond yield has punched through TDST resistance on the daily chart and so the bond itself is in a bearish trend. In fact, it may be ending the consolidation since June.
CRB Index: Neutral. Has been consolidating since 10/21/09 but TDST Support (266.74) seems to have held and we are now bouncing.