The US dollar index continues to trade above support at 98.80, but I believe it is forming a bearish wedge. We could see a higher high today or tomorrow, but I expect this pattern to be broken downwards towards 97.
Blue line -medium-term trend line support Red lines - bullish channel In the short-term, prices are held above both the cloud and trend-line support. The bullish channel we are in is well defined, so a close below 98.70 will be a clear confirmation of bearish reversal. This will imply 97 will have high chances to be tested.
Blue lines - bearish wedge The daily chart shows a bearish wedge pattern which is being formed just above daily cloud support at 98.80. If this support fails to hold, we should expect the price to test support at 98.40 initially and then most probably move even lower. I am bearish on the US dollar as long as we are below 100.50.
The H1 chart shows that USDX is consolidating above the 200 SMA and the bullish outlook remains unchanged, as the index is trying to break the resistance level at 99.22. It would also break the range where the US dollar has been trapped for several sessions in this month. The MACD indicator is entering negative territory, so be cautious when trading in the long-side below the 99.22 level.
H1 chart's resistance levels: 99.22 / 99.49 H1 chart's support levels: 98.79 / 98.39 Trading recommendations for today: Based on the H1 chart, place buy (long) orders only if the USD Index breaks with a bullish candlestick; the resistance level is at 99.22, take profit is at 99.49, and stop loss is at 98.94.
The US dollar index remains above short-term support trading sideways. A trend is neutral, but we will see some action soon as market participants are eagerly awaiting Mario Draghi's comments.
The price is above the Ichimoku cloud and still inside an upward sloping red channel I showed yesterday. There is no clear short-term trend while the medium-term trend remains bullish. Resistance is found at 99.30 today.
Blue lines - bearish wedge The daily chart remains bullish as the price is still above the Ichimoku cloud support at 98.80 and still inside the wedge pattern and lower support at 98.50. Resistance is seen at 99.35. If it gets broken, we should expect a move towards 99.80.
Technical analysis of US Dollar Index for January 21, 2016
Technical outlook and chart setups: The US Dollar index might be looking to break below the consolidation range for now. The index is trading around 99.00 levels for now after reversing from its resistance line around 99.25/30 levels earlier. It should be looking to break below 98.60 levels and subsequently below the consolidation range here. It is hence recommended to initiate short positions now, with risk at 99.40 levels. Immediate support is seen at 98.60 levels while resistance is seen at 99.30/35 levels respectively. Only a push above 99.40/50 levels from here, should change the bearish view going forward. Trading recommendations: Remain short now, stop at 99.40, a target is at 96.40. Good luck!
At the H1 chart, the Index is doing a rebound above the 200 SMA and now we can expect a re-test of the resistance level around the 99.22 level. However, we're still seeing a sideways consolidation in progress above that moving average and we shouldn't discard a possible deep pullback towards the 98.39 level.
H1 chart's resistance levels: 99.22 / 99.49 H1 chart's support levels: 98.79 / 98.39 Trading recommendations for today: Based on the H1 chart, place buy (long) orders only if the USD Index breaks with a bullish candlestick; the resistance level is at 99.22, take profit is at 99.49, and stop loss is at 98.94.
The USDX had a very volatile session on Thursday, as the index did a strong pullback after a bullish momentum gained above the 200 SMA on the H1 chart. However, the moving average is still acting as dynamic support and a push higher could move the index to the level of 100.00 in order to test it in a mid-term term. The MACD indicator is in the negative territory.
H1 chart's resistance levels: 99.22 / 99.49 H1 chart's support levels: 98.79 / 98.39 Trading recommendations for today: Based on the H1 chart, place buy (long) orders only if the USDX breaks with a bullish candlestick; the resistance level is seen at 99.22, take profit is at 99.49, and stop loss is at 98.94.
The US dollar index spiked higher towards 99.80 during the press conference of ECB president Mario Draghi. Mainly because of the weak EUR/USD pair, the index rallied, but got rejected at the upper resistance boundary of a bearish wedge formation I pointed out a couple days ago.
Blue lines - bearish wedge pattern The index continues to trade above the Ichimoku cloud support of 98.90. The rejection was not a good sign for dollar bulls yesterday, but the fact that sellers did not manage to breakout below the cloud was also not a good sign for bears. The index is trapped inside this wedge pattern, so only in case of a breakout above or below it, things will clear up.
On a daily basis, the price remains above the Ichimoku cloud and this is a positive sign. However, bulls will need to breakout above 100.50 for a new short-term trend to start. Otherwise, they can see the index reversing and pushing lower towards 97. I'm bearish as long as the price is below 100.50.
The US dollar index remains inside the bearish wedge pattern and continues to grind higher. However, I prefer to remain bearish and expect this wedge pattern to be broken downwards.
Red lines - bearish wedge The US dollar index is trading inside the red wedge pattern and above the Ichimoku cloud. Support is found at 98.80 where both the cloud and the lower wedge boundary are found. If this level gets broken, we should expect pressure to be put onto the next critical support level of 98.50.
Red lines - wedge pattern In the daily chart, the index is above the cloud and both tenkan- and kijun-sen. Support is critical at 98.50 as Ichimoku indicators confidence and wedge support is found. The level of 97 is the first short-term target if support at 98.50 fails to work well.
In the short term, the USDX is showing us bullish strength above the 200 SMA as we can see on the H1 chart. A few sessions ago, the index did a rebound on that moving average and we can expect a rally towards the resistance level of 99.69. This would be the last step in order to reach the key level in the zone around 100.00. The MACD indicator remains in the positive territory and the slope of the 200 SMA is slightly pointing to the upside.
H1 chart's resistance levels: 99.69 / 100.00 H1 chart's support levels: 99.49 / 99.22 Trading recommendations for today: Based on the H1 chart, place buy (long) orders only if the USDX breaks with a bullish candlestick; the resistance level is seen at 99.69, take profit is at 100.00, and stop loss is at 99.38.
The US dollar index is getting under pressure ahead of the FOMC rate announcement and Janet Yellen's speech. The bearish wedge pattern I mentioned in my previous post is being tested and we could see a downward breakdown over the next couple of sessions.
Red lines - bearish wedge The price is above the Ichimoku cloud in the 4-hour chart, but it has also broken below the kijun-sen support. The next support is found at 98.80-98.60 where the Ichimoku cloud is observed and a lower boundary of the upward sloping wedge.
Red lines - upward sloping wedge The daily chart remains bullish as the price remains above the cloud, inside the wedge and above both the tenkan- and kijun-sen indicators. Volatility is expected to rise over the next two sessions. I believe the price is likely to break out downwards towards 97. Resistance is seen at 100.
