US$ down: levels to watch

The US$ has weakened further overnight and, I have to admit, I thought we might have seen a bit of a pause or even a pullback here. However, the FX Indices are aligned for US$ SHORT and EUR$ LONG so my ‘thoughts’ obviously count for little! The index tested down near the 95.50 S/R level during the last session and if that doesn’t hold or trigger a bounce then lower levels will come back into focus. In this post I note these levels and some interesting observations.

USDX daily: the triangle from the most recent breakout had a ‘height’ of around 350 pips. Price has moved 300 pips so far, thereby almost completing this breakout move, but has now reached some support from the 95.50 region. This will be the level to watch for any make or break activity in coming sessions:

USDXdaily

USDX weekly: Price action has been range-bound for over 12 months now between the 100 and 92.50 levels. Any break and hold below this 95.50 support would suggest a test of the bottom of this channel down at 92. Then, any break and hold below this channel level of 92 might support a deeper retracement. The height of this channel is 750 pips. Interestingly, just under 750 pips below this channel is the previous breakout region of the last major momentum move when the index broke up through a monthly chart triangle trend line. This previously broken trend line rests 700 pips below this channel, near the 86/87 region, and would make an obvious target IF price moves back down through these 95.50 and 92 support levels:

USDXweekly

USDX monthly: the broken monthly triangle trend line is better viewed on this monthly chart. Note how this chart presents with a potential Bull Flag though and how any close and hold back above 100 would support a continuation move up to the next major S/R level near 120. The 100 level is the upper level to watch on this index:

DXYmonthly

Summary: The US$ index remains range-bound between 100 and 92.50 but is currently testing 95.50 support:

  • Any break and close below 95.50  would bring the bottom trend line of this channel at 92.50 back into focus.
  • Any break and hold below 92.50 would bring the monthly chart’s triangle trend line, near 86/87, into focus.
  • Any reversal and move and hold back above 100 would bring the previous S/R region of 120 into focus.

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