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Erik McCurdy
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Erik is the senior market technician for Prometheus Market Insight and has been performing chart analysis since 1995. The software program that he developed to monitor long-term stock market trends has correctly identified 92% of the cyclical turning points in the S&P 500 index since 1940. His... More
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  • US Dollar Rally Closes At New High 2 comments
    Jul 7, 2012 3:48 PM | about stocks: UUP

    The US dollar index closed sharply higher this week, moving up to a new high for the rally from August 2011. At the beginning of May, we identified the potential development of a bullish consolidation formation. The consolidation formation developed as expected and the index broke out in late May, signaling the highly likely resumption of the uptrend. The initial target of the breakout move remains the 84.50 level, although the rally is strengthening and there is no meaningful resistance above current levels until the 88 area, so the advance could certainly move much higher.

     

     

    (click to enlarge)

    From a big picture perspective, the rebound off of the last long-term cycle low (LTCL) that we identified in September continues to gain strength and a subsequent return to the previous long-term cycle high (LTCH) near 88 would suggest that cycle translation is in question.

     

     

    (click to enlarge)

    The US dollar continues to experience violent swings higher and lower as the structural conflict between deflation and inflation rages on. Considering the unprecedented liquidity operation that the Federal Reserve continues to engage in, it will be interesting to see how far and long the current rally is able to proceed. As always, judiciously applied chart analysis will enable us to identify the key market developments as they occur. We will provide updates in our daily market forecasts and signal notifications available to subscribers.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: UUP
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Comments (2)
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  • untrusting investor
    , contributor
    Comments (9903) | Send Message
     
    Given the almost certain decline in the euro in coming months and quarters, it seems likely the dollar will continue to strengthen unless and until QE 3 is announced.
    8 Jul 2012, 12:33 AM Reply Like
  • Michael Clark
    , contributor
    Comments (11707) | Send Message
     
    Erik: Are you reading my mail? Could not agree more. Dollar rally on; stock rally off; commodities going lower.

     

    http://seekingalpha.co...
    8 Jul 2012, 02:00 AM Reply Like
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