This week I began to explore the idea that the US Dollar $USDX may be topping out on a short term basis.  After surging to new highs last Friday, the dollar gave it all back and proceeded to chop around this past week.  Remember, we are still trading above rising 20, 50, and 200 day moving averages, so the trend is up and short positions should only be taken on small time frames and gains booked quickly.  But…there are reasons to believe that the ascent of the $USDX off the bottom may be coming to an end, for now.

This is a chart posted last night by on of my favorite technical analysts, @theEquilibrium.  There are major momentum indicators on the chart giving warning signals to those who are long the dollar.  RSI, Stochastics, MACD and WM %R  all shout sell.

I’m making a call here that you should begin to position your trading in a way which assumes if not a move lower in the dollar, at least a halt in its uptrend for a time.  I’m taking other fundamental factors into consideration, including the record short position in the Euro $EURUSD.  I can see a quick squeeze coming in the Euro and believe that Greece will be rescued.  Keep your eye on crude $CL_F and the smaller oil service and driller names.  Keep your eye on gold $GC_F here as well, the action last week was quite bullish.  The miners are a difficult trade, but if you’re willing to give your position some wiggle room now may be the time to dip in.

Short term target $USDX, 79.50.

Thanks again to @theEquilibrium for the excellent chart.