It was only a
week ago that I was looking at the Dollar and saying: "The inability
of the Dollar to bounce when are investors are extremely bearish suggests
that oversold has become more oversold. This is the definition of a strong
down trend." This week, prices have reversed rather dramatically, and
in all likelihood, the Dollar will end the week with the down trend reversed
and the intermediate term trend looking up.
See figure 1 a weekly chart of the PowerShares DB US Dollar Bull (symbol:
UUP). Key pivot points (areas of buying and selling or support and resistance,
respectively) are noted on the chart. Last week prices closed below support
levels and we were bearish, and support became resistance. This week it is
likely that UUP will close above resistance (old support), and this is bullish.
A reasonable intermediate term price target is 23.84, which is the down sloping
40 week moving average.
Figure 1. UUP/ weekly
Figure 2 is a daily chart of UUP. The close above the pivot at 22.28 is an
early sign of a trend change. By this daily chart, a reasonable price target
is 23.40.
Figure 2. UUP/ daily
In the final analysis, the death of the Dollar is premature. However, a weekly
close back below support at 22.36 is bearish. Stay tuned and remain flexible.
Disclaimer: Guy M. Lerner is the editor and founder
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is based upon information thought to be reliable and is not meant as investment
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