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US Dollar Approaches Intermediate-term Cycle Low

Mar. 27, 2011 1:32 PM ETUUP
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Long/Short Equity, Contrarian, Medium-Term Horizon, Long-Term Horizon

Seeking Alpha Analyst Since 2010

The US dollar index closed moderately higher this week, reacting off of recent lows of the downtrend from the beginning of the year. We are 20 weeks into the intermediate-term cycle from November 2010 and the next Intermediate-Term Cycle Low (ITCL) will likely form sometime during the next few weeks, if it has not already occurred this week.

For the past several weeks, we have been monitoring the potential breakdown of a symmetrical triangle on the monthly chart, and the character of the rally off of the forthcoming ITCL should provide additional clarity with respect to long-term direction.

A strong rally that moves the index back into the symmetrical triangle would suggest that long-term direction is once again in question. However, a weak reaction followed by a quick return to recent long-term lows would signal that a breakdown is imminent and forecast a relatively quick move down to previous lows of the secular bear market in the 72 area.

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