The US dollar trade perked up LAST NIGHT when it move above the critical level I had pointed out to my paid subscribers as the key selling point. That number was 76.71. That is very positive for a short term rally.
The one catch is that these reversals of reversals have to prove themselves as all other trends do, so we must see a bit more progress to be sure the UUP will continue to rally.
This will of course produce downward pressure everything else except Treasuries which tend to rally with the dollar. That means stock, commodities, and everything that has been the subject of very Bullish buying lately could begin to sell off.
I would not necessarily trade out of your long positions in a big way, but you could scale back a bit or set stops below here and decide when you will trim your exposure. See my page on going “passively short” the market on the blue Navigation Bar to the left on the home page SunAndStorm.com.
I would say that holding above 76.98 on the dollar index would be a very good sign that the rally has more to go. We are trading slightyly ABOVE there at 77.09 right now. We have to be sure it HOLDS above there by the close to confirm the second sign of strength.
Since the dollar trades all night long, it’s hard to suggest using closes except for weekly closes, since Forex people do give themselves a weekend break! If you buy intraday, beware of reversals and scale into the trade. If you don’t know how to do that, subscribe to my 2 week trial and I’ll send you the EBook for free on how to scale IN and OUT of the markets profitably.
I’ll publish some dollar charts on my blog page later today, so be sure to check back later. The charts should be up by around 6 pm at the latest. (see blue nav. bar toward top for the button).
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You can review more of my most recent comments on the markets HERE:Market Timing Blog at SunAndStormInvesting.com
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Standard Disclaimer: Remember, it’s your money and your decision as to how to invest it.
I’ve published the chart with the critical numbers on my Market Timing Blog on the main website. The link is in the post above. Have a good one.