The December Dollar Index is down 4.5 ticks at 76.54 this morning as I write. The enclosed chart shows that the dollar has corrected only 2.2% off the lows from a week ago. The chart also shows that the dollar has rallied back to the 40 day exponential moving average, which has held it back for several months. So, if the dollar can close and follow through above the 40 day average at 76.73, then that would be impressive. The directional movement indicators have barely crossed to the bull side while the ADX line is still dropping. More than half of my other indicators are still bearish so I am not going to take a long position in the dollar at this time since the directional indicator turned bullish. My indicators still suggest that this is just a short covering rally before prices fall again. If the indicators change then I will change. For now, the sidelines is where I want to be.

Oct. 29, 2009
David Hall