The DXY has today made it to 84.70, just shy of the July 2013 top at 84.75. This should prove strong resistance and given that the MACD are becoming overbought and the RSIâ€™s/Stochastics are not really backing this move up, some caution is warranted.
On a break of 84.75 I cannot see too much to stop it heading on towards 76.4% Fibo resistance/descending monthly trend line at around 85.50 (see below) and then on to the 29 June 2010 high at 86.30 (weekly chart below). Beyond there would eventually head to the 7 June 2010 high at 88.70, from where it collapsed, eventually to 80.08 by August 2010.
Dips in the dollar should now see support in the DXY at 84.25 and then at around 84.00 and then at last weekâ€™s close at around 83.75. Stronger support would be seen at the break-up level of the long term downtrend resistance-now-turned- support, at 83.35 and then below there at 83.31 (23.6% of 78.86/84.70). I donâ€™t think we are going there, but â€“ as before -, dips are buying opportunities, given that the weekly charts look to have plenty of upside potential. In the short term some consolidation may be necessary.
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