'Real Panic Going on' in Dollar Index: Charts

A characterization the dollar's decline as a 'real panic' could still be viewed as premature in 2010. This does not suggest, however, that this trader’s comments should be dismissed as “talking one’s book” (position).

The technical damage in the dollar is undeniable. The neckline of the head-and-shoulders pattern (an inflection pattern) has been smashed on a surge in trend energy. This is clearly illustrated by the sharp drop in REV(E) in the dollar index ETF chart.

The breach of the neckline (NL) yields a minimum downside projection. These are illustrated as blue and green columns in the dollar index ETF and dollar index, respectively. Both projections imply a retest of the 2008 lows.

A break of the 2008 lows, likely in 2011, will generate some ‘real panic’.

U.S. Dollar Index ETF (UUP):


U.S. Dollar Index (DXY):

The dollar index looks set to continue its rapid decline and could fall below 72 point before the end of October, a level not seen since mid-2008, independent trader and technical analyst Bill McLaren told CNBC Friday.

Source: cnbc.com