Quarterly Chart of the Dollar Index

Yesterday we saw that the US Dollar index was in a downtrend on the yearly chart from the 2001 high. On today’s quarterly chart you can see that a TD Sell setup was perfected at that high and that the swing index (orange line) has been making lower lows and lower highs since. Within the downtrend there were two brief bounces (2005 & 2008), both of which occurred after TD Buy Setups were made. The last bounce failed at TDST resistance (dashed red horizontal line)

Over the past year the dollar index has resumed its decline and is now quite close to its previous low and the completion of a TD Sequential buy countdown. If we close December below 78.33 we will have completed bar #12 of the required 13. We then need a close below 75.83 at the end of March 2010 to complete the sequence. Alert investors/traders will want to keep an eye on this, particularly if we get the yearly price/RSI divergence mentioned yesterday.

One take away from the above paragraph is that it seems we need one more decline from where we are now to fulfill the sequential countdown. That is, 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 76.93 today. How likely is such a price movement? Maybe a look at the monthly chart tomorrow will help answer that question.

Technical Analysis of for longer-term positions:

Dollar Index: Out. (0.65 point loss after 1 trade). We are at resistance now as a perfected TD Sell setup completes. If we can’t close above 77.05 today we may well see a pullback or consolidation develop.
World Gold Index: 1101.20 appears to be holding as support and we are close to making a TD Buy setup bar #9; but it would need a low less than 1110.20 to perfect. But with a RSI/Composite buy signal in place and higher time frame charts bullish: Long on a close above 1132.40.
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.