“The Dollar Sentiment Index for the Dollar Index reports just 3% bulls among traders, an extreme level only five times in the past 20 years, usually near an important low,” Prechter wrote on Aug. 5. “The last time we saw readings like this was March-July 2008, just before the dollar soared.” In other words, the “short the dollar” trade is overly crowded.

So that’s all the ‘research’ I put into this trade. I think it looks reasonable that the dollar is set for a rally, and at the very least the downside is probably limited at this level. I’ll be looking to make a few points on this and get out soon.

Here’s a chart where I made my buy (blue arrow):

This post originally appeared at: Clear Trades. Follow me on Twitter

Bought 50 shares of UUP