Whipsawed!

The U.S. dollar index reversed smartly on Wednesday to the tune of 0.82 of a point, or 1.09%, completing an asymmetrical but otherwise well-formed inverse head and shoulders. The dollar now seems ready for the sizable rally we had been expecting before its temporary weakness this week.

RSI has crossed back up above 50, and MACD is continuing its climb.

If the support holds on any pullback to the neckline at about 76.17, there is a good chance the index could clear initial resistance offered by the 50-day MA (currently at 76.85) on its way to the measured target of 77.86. That target happens to lie in the vicinity of the Fibonacci line at 77.66 and the longstanding downward-sloping trendline.

Such a scenario would, of course, curtail any hope of an immediate recovery in the price of gold.