The US dollar index failed to reach a new lower low last week. It is now testing important short-term resistance levels. As I have been expecting since last Friday, bulls should regain control of the trend as the Fed is expected to raise rates and strengthen the US dollar.
Black line - resistance trend line Although the market might have already priced in a rate hike, technically the US dollar index is ready to give a short-term bullish signal by breaking above the resistance trend line at 97.90. Next resistance is seen at 98.90. Support is found at 97.20. If it gets broken, we should expect the level of 96.50 to be tested.
In the weekly chart, we can see how the price held above the first Ichimoku support the tenkan-sen at 97.15 where the 50% Fibonacci retracement is also found. Bulls have stepped in and from this area we could see the next upward leg that can bring the index to new highs above 100-101.
Daily analysis of USDX for December 14, 2015
On the H1 chart, the USDX is trying to find strong bottom around the level of 97.60, as the index will try another bullish breath towards the zone of the 200 SMA. However, any breakout below the level of 97.60 will expose the USDX to test the level of 97.01 on a short-term basis. A consolidation below it will push the index in late December.
H1 chart's resistance levels: 98.14 / 98.80 H1 chart's support levels: 97.60 / 97.01 Trading recommendations for today: Based on the H1 chart, place sell (short) orders only if the USDX breaks with a bearish candlestick; the support level is found at 97.60, take profit is at 97.01, and stop loss is at 98.21.
The US dollar index remains weak with new short-term lows ahead, but with the RSI providing a bullish divergence signal combined with the FOMC meeting scheduled for tomorrow. Dollar bears should be very cautious.
Black lines - downward sloping wedge Blue line - price projection The US dollar index is trading inside a downward sloping wedge at the 50% Fibonacci retracement of a rise from 93.80. This is important support. The RSI is also giving a bullish divergence signal as it does not reach lower lows like the price did. With the FOMC meeting taking place tomorrow and these signals, bears should be very cautious.
Although short-term trend is bearish, the medium- and long-term trend remains bullish as the weekly chart remains above the weekly Ichimoku indicators and above the weekly cloud. Weekly support levels are found at 96.50 and at 95.40. I believe that the US dollar index will reverse to the upside and we should expect the US dollar to rally. Important resistance that needs to be broken is seen at 98.
The USDX is about to form a kind of double bottom pattern on the H1 chart, the weak bias seems to remain alive as long as the index stays trading below the 200 SMA in this time frame. We can expect a bearish continuation towards the support level of 97.01. An overall structure favors this scenario, but we should remain cautious during this weak, because of the Fed's meeting.
H1 chart's resistance levels: 98.14 / 98.80 H1 chart's support levels: 97.60 / 97.01 Trading recommendations for today: Based on the H1 chart, place sell (short) orders only if the USDX breaks with a bearish candlestick; the support level is found at 97.60, take profit is at 97.01, and stop loss is at 98.21.
On the H1 chart, the USDX is preparing to do a pullback at the 200 SMA, because of the current weakness, but bear in mind the index could try an intraday consolidation above the 200 SMA to face resistance in the zone of 98.80. In another scenario, a pullback can send the USDX to visit the support level of 97.01. The MACD indicator is overbought.
H1 chart's resistance levels: 98.14 / 98.80 H1 chart's support levels: 97.60 / 97.01 Trading recommendations for today: Based on the H1 chart, place sell (short) orders only if the USDX breaks with a bearish candlestick; the support level is found at 97.60, take profit is at 97.01, and stop loss is at 98.21.
The US dollar index has reversed its short-term bearish trend generating a short-term bullish signal. Important support is seen at 97. Dollar bulls are in control of both short- and long-term trends again, but with the FOMC announcement about the long-expected rate rise, traders should be very cautious.
Black lines - wedge (broken) The US dollar index turned upwards as it broke out the downward sloping wedge as we had expected. The bullish divergence in the RSI worked well for our bullish signal. Short-term resistance is seen at 98.30 and next at 99.
The weekly chart remains supported at the 50% retracement and technically the downward correction can be over. The downward sloping stochastic is the only matter of concern. So, important support is found at 97 and next at 96.50. Breaking below these levels will open the way to the weekly Ichimoku cloud at 95.25.
The US dollar index gave the first bullish reversal signal ahead of the FOMC meeting by breaking above and out of the downward sloping wedge. When I identified the wedge pattern, I found that dollar's strength was to come back and US dollar bears should be cautious.
Black lines - bullish wedge Blue line - bullish divergence A couple of days days ago, I identified the bullish wedge and the bullish divergence in the US dollar index the 4-hour chart. A buy signal would be given once the price broke out of the wedge. After yesterday's FOMC announcement, the US dollar index got very volatile as it usually does in circumstances like this. It was an important day for the greenback. The index pulled back but failed to break below the critical support of 75.
The 50% Fibonacci retracement held very well in the weekly chart after the FOMC meeting, and as we expected the USDX started its next upward journey. Now it is important to break above resistance of 99 and hold above 97.50. As long as the price is above 97.50, we remain bullish on the US dollar.
The USDX is trying to do a bullish consolidation above the 200 SMA in the H1 chart, after the Fed's interest rate hike to 0.50%, in an announcement made at Wednesday's session. Technically, we should see a rally towards the resistance level of 98.80 where a pullback can happen to take a breath before any rallies that could be seen. The MACD indicator is entering the neutral territory.
H1 chart's resistance levels: 98.80 / 99.19 H1 chart's support levels: 98.14 / 97.60 Trading recommendations for today: Based on the H1 chart, place sell (short) orders only if the USDX breaks with a bearish candlestick; the support level is found at 98.14, take profit is at 97.60, and stop loss is at 98.69.
It seems that the index is trying to consolidate above the 200 SMA for a bullish ride in a short-term basis. However, because of this, the USDX could start to pullback towards the support level of 98.80, where a rebound can happen. It should be noted also that there is a higher high pattern formation ongoing in the H1 chart. The MACD indicator is entering at the negative territory.
H1 chart's resistance levels: 99.19 / 99.48 H1 chart's support levels: 98.80 / 98.14 Trading recommendations for today: Based on the H1 chart, place buy (long) orders only if the USDX breaks the bullish resistance level at 99.19, take profit is at 99.48, and stop loss is at 98.86.
The US dollar index faced important short-term resistance and reversed. Important medium-term support is found at 97. If lost, we should expect a bigger decline towards 94.50-95. If however the index reaches a higher low, we should expect the price to move above 100.50 next week.
The US dollar index brake above the Ichimoku cloud in the 4-hour chart, but got rejected at the 61.8% Fibonacci retracement. This rejection is important. However, I believe we can see a push higher towards the 78.6% Fibo. Important short-term support is found at 98.30. Resistance is seen at 99.30 and at 99.80.
The weekly chart remains bullish in all time frames. An important bounce off the 50% retracement is now an important reversal point. In case of a breakout at the level of 97, the price will fall towards 95-94 where the Ichimoku cloud is found. So, we remain bullish as long as the price is above 97 on a weekly basis.
