 U.S.Dollar
Index
Time For Consolidation To Make Way
For An Extended Move
Technical observations of RossClark@shaw.ca
Bob Hoye
Institutional Advisors
posted May 11, 2005
ChartWorks PUBLISHED May 9th BY INSTITUTIONAL ADVISORS
The US Dollar Index is now
at an important crossroad. In December the Index generated downside
exhaustion followed by a reversal in momentum and an excellent
rally into February 8th (85.44). From there the market was anticipated
to make a test of support and needed to hold above 80.90 in order
to maintain the basing pattern. The test came fourteen weeks
after the bottom in the RSI(14) and produced a higher low in
the RSI. This is the common pattern seen at four important US
Dollar bottoms (1999, 1995, 1991 & 1988) and one failed bottom
(1987).
The subsequent rally to 85.32
tested the February 8th high and the 40-week exponential moving
average. As of this week prices are back at important resistance
one again. If prices have upside follow through from this
level we can target the 50-week standard deviation band as a
likely objective as seen at the four previous bottoms. The band
currently sits at 91.02. From a timing perspective, the overall
rally from the low in the RSI on December 3rd can be expected
to reach the band after 32 to 40 weeks (July 15th to September
9th). A failure here and violation of 83.35 would result in a
resumption of the bear market with a similar targeted time window
for the next interim low.
The labels
identify the number of weeks from the low RSI reading to the
tested low followed by the significant high at the standard deviation
band.
- Since the December low, a
lengthy uptrend for the dollar has been possible. Current technical
conditions suggest that this is about to extend.
- This does not change our long
term bullish outlook on gold and gold shares.
- This will perplex orthodox
goldbugs, but we remain optimistic about their ability to learn
how gold works during the long post-bubble contractions.
- This can be accomplished the
hard way through experience in real time or the easy way by reviewing
the history of financial markets.
Bob Hoye
CHARTWORKS - MAY 9 2005
Institutional Advisors
email: bobhoye@institutionaladvisors.com
website: www.institutionaladvisors.com
Hoye Archives
The opinions
in this report are solely those of the author. The information
herein was obtained from various sources; however we do not guarantee
its accuracy or completeness. This research report is prepared
for general circulation and is circulated for general information
only. It does not have regard to the specific investment objectives,
financial situation and the particular needs of any specific person
who may receive this report. Investors should seek financial advice
regarding the appropriateness of investing in any securities or
investment strategies discussed or recommended in this report
and should understand that statements regarding future prospects
may not be realized.
Investors should note that income from such
securities, if any, may fluctuate and that each security's price
or value may rise or fall. Accordingly, investors may receive
back less than originally invested. Past performance is not necessarily
a guide to future performance. Neither the information nor any opinion expressed constitutes
an offer to buy or sell any securities or options or futures contracts.
Foreign currency rates of exchange may adversely affect the value,
price or income of any security or related investment mentioned
in this report. In addition, investors in securities such as ADRs,
whose values are influenced by the currency of the underlying
security, effectively assume currency risk. Moreover, from time to time, members of the Institutional Advisors team may be long or short positions discussed in our publications.
321gold Inc
|
