The Dollar Is Recuperating

• Posted by Greg Harmon
• on November 19th, 2014

A couple of weeks ago it looked like the US Dollar Index ($UUP) was ready to move up and continue its trend higher. I called it the Super Dollar and discussed the potential for a move over 90 even. The Dollar Index did move higher, but something happened to stop it along the way. It ran into something. Not Kryptonite. It ran into a Crab.

A bearish harmonic Crab that is. The chart above shows the Crab in red. It triggered on a move over 88.30 and targets a pullback to one of two levels, 86.87 or 85.97. These are the 38.2% and 61.8% retracements of the Crab pattern, and key Fibonacci levels. The first level, also coincides with support, at the prior top, while the second you can see is equivalent to the mid point of the Crab, the 50 day SMA, and resistance prior to that. The point being that both levels have some historical significance as well.

The momentum indicators support a pullback as well with the RSI running lower and the MACD about to cross down. A pullback to either of these levels does nothing to negate the uptrend. But a move below the second would as the target then becomes a full retracement to 84.53.

What might be more interesting is if it continues to show strength by not pulling back. A move back over the prior high at 88.32 not only brings the upside levels back into play but can be taken as a sign of strength. Until then the trend remains higher and you have to lean that way. Perhaps the Super Dollar is immune to Crabs.

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