The Dollar and Euro

Obviously yesterday's bad auction in Portugal on short term 6 month bills, with the yield nearly doubling has set about another round of contagion fears and as such the Dollar is gaining while the Euro is sinking.

I've been bullish on the dollar since October seeing this pattern and the accumulation associated with it. These wedges continue to be successful patterns, but they are nowhere as easy to trade as they use to be and require wider stops. As you can see, today the dollar broke out of a large consolidation pattern. My target for the US dollar is via UUP is up around $25.50 (Wedges retrace their base-is a good rule of thumb for setting price targets.)

Here's the 3C chart that shows all of the early 3C signals showing the change of direction at each turning point.

As you can see, the red negative divergences have consistently led to sell-offs and the white positive have led to rallies.  We're in a rally phase now and being we broke resistance today, it may be an important one with the next leg moving higher. Typically this would have negative implications for commodities including precious metals as we have seen this week in a few featured posts on GLD and SLV. It effects other comodities and equities, especially multinational corporations. Perhaps that's part of the MCD weakness we have observed.

Here's the Euro trust.

You can see the target at minimum in white.

As of this a.m., the Euro is trading at $1.3018, perilously close to the $1.30 level that many believe will lead to a technical breakdown.

Commodities are worth a look, as are the PMs and of course, if there's any correlation left that Brian Sacks hasn't destroyed, there may be some negative impact to equities.