The Dollar

Yesterday I showed you the intact downtrend in the Euro, the Euro accounts for 50% of the US Dollar Index so which ever way the euro moves, you can just about count on the dollar index or UUP moving the opposite way. It seems there is an effort to accumulate dollars or the Dollar Index, this is not in my opinion because of the United States' strong economic situation, but it's the lesser of two evils as the euro zone seems to crumble more and more everyday. How long Italy's economy can withstand the lack of oil needed as it remains one of the cotagionized PIIGS is a startling question and one the bond vigilantes will act on, which may hop-scotch Italy up to the front of the crisis bailout line.

In any case, good bad or indifferent, if smart money seems to be going there, there's a reason.

Here's UUP's recent charts and it has remarkably held together rather well ll things considered. Now with Germany's Merkel at the mercy of the German voters who are sending a clear signal, "No more bailouts" the whole contagion mess just got a lot messier.

 The now common bullish wedge, turned into a base before breaking higher.

 A closer look at the base reveals an area of support, even when we saw  breakdown we were quickly able to identify it as a false move (in the red box), today, once again support.


3C hourly trend shows growing positive divergences and once again in the red box, the positive divergence that showed the breakdown to be a false shakeout.

It seems whether the dollar is a good investment or not, it's better then the Euro, that seems to be the message of the market.