Indecision For The Dollar?

by Erik McCurdy

The following technical and cycle analyses provide short-term forecasts for the U.S. dollar index. For intermediate-term outlooks see the latestintermediate-term forecast and for long-term outlooks see the latest long-term forecast.

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Technical Analysis

The index closed moderately lower Tuesday (16 December 2014), beginning a test of support at the lower boundary of the uptrend from July. Technical indicators are effectively neutral overall, suggesting that direction is in question.

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Cycle Analysis

We are 4 sessions into the beta phase rally of the cycle following the short-term cycle low (STCL) on November 20. The beta high (BH) may have formed on December 15, although we would need to see additional weakness during the next session to confirm that development. An extended beta phase rally that moves well above the last alpha high (AH) at 89.43 would reconfirm the current bullish translation and favor additional short-term strength. Alternatively, a quick reversal followed by an extended beta phase decline that moves well below the last STCL at 87.70 would signal the likely transition to a bearish translation. The window during which the next STCL is likely to occur is from December 17 to January 2, with our best estimate being in the December 22 to December 29 range.

• Last STCL: November 20, 2014
• Cycle Duration: 17 sessions
• Cycle Translation: Bullish
• Next STCL Window: December 17 to January 2; best estimate in the December 22 to December 29 range.

 

• Setup Status: No active setups.
• Trigger Status: No pending triggers.
• Signal Status: No active signals.
• Stop Level: None active.

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Short-term Outlook

• Bullish Scenario: A rebound and close above the recent high at 89.43 would reconfirm the uptrend from May and forecast additional gains.
• Bearish Scenario: A close well below uptrend support near 88.15 would predict a move down toward congestion support in the 85 area.

Both scenarios are equally likely.

Editors note: On Thursday, 18 December the dollar index moved above 89.43, and closed the market Friday at 89.83. According to the outlook above, this confirms the bullish trend for the dollar.