Technical Snapshot on the U.S Dollar

Since our Michael Pento just wrote a fundamental piece on the U.S. dollar, I thought I'd follow up with a quick technical snapshot.

In the short run, I'm a bit torn but leaning negative. The small positive which makes me hope the dollar bounce may gain strength is that, on a Point & Figure basis, a move above 74 would notch the second straight double-top buy signal off the bottom, making a short-term move to the mid-70s very likely. And there would be room all the way up to the high 70s, even without changing the dollar's negative long-term trend. In other words, odds would increase with a move above 74 that this counter-rally could become quite strong.

chart courtesy of Dorsey Wright & Associates

On the other hand, the dollar was extremely oversold in March. Since then, it has worked off that oversold condition without rallying too far:

chart courtesty of stockcharts.com

That's very weak action which calls the slight dollar rally we've seen into question. The Greenback needs to make more technical headway soon or risk running out of steam and moving back to the lows.

Comments

[David Roskoph:]

Arcane algorythms aside - the dollar will rise because they are becomeing more rare, not more abundant. The great sucking sound you hear is deflation.

2008 Jun 13 01:36 AM

[the final h...:]

oh i wouldnt worry too much...until the USD achieves parity with zimbabwe...by then, we will be importing corn from china

2008 Jun 13 04:59 AM

[barcswine:]

The US dollar is clearly undervalued; perhaps as much as 40% as I view it. The US economy is still the strongest in the world, and will stay that way long into the future as contrasted with the EU states which are now showing really serious signs of economic instability with the sole possible exception of Germany.

The EU leadership (Ha !) is in complete denial about how this weak and socialistic hodgepodge of member states really is; how weak the euro actually is; and how inferior the "nanny state" is compared with the good old American "can do" mentality and real democracy.

The recent NO vote on the Lisbon Treaty by Ireland is just another crack in the EU mentality that "big brother knows best." Road apples, I say.

I also bet that the EU will cobble together another treaty (Lisbon II, let us say) within 18 months or so, and force the Irish people to vote once again for that which they just turned down. And they call that democracy. Another HA !

But by that time, I will have left Ireland after residing here for the last 15 years, and returned to the USA where a vote counts for something more meaningful than it does in the EU, and where elected officials are not faceless and unaccountable as they are in the monster EU matrix posing as democratic.

Who knows, as the European press is now full of EU palaver about punishing Ireland for its NO vote, perhaps Ireland just might petition the USA for admission as its 51st state. Unlikely of course, but what a HOOT that would be.

Poor Taoiseach Brian Cowen, who now, has to explain to the EU bigwigs in Brussels next week what the Irish people meant by voting NO! There is only one explanation: NO means NO ! It also means "Feck off!" That is what I like about the Irish; Paddy is not as stupid as the EU leadership had assumed. Another Guinness, thank you !!!!


I predict that the EU chickens will come home to roost within 18 months, and then the dollar will once again be the safe haven it has historically been for the last 100 years. Hence, I am truly bullish on the USD.

2008 Jun 14 10:20 AM