The USDX has finally made a Bull Flag breakout but that isn’t the end of its woes. It is once again butting up against a major resistance trend line and so bullish continuation cannot be taken for granted here at all.
USDX daily: the index has made a ‘Bull Flag’ breakout but now has a major triangle trend line to contend with and, then, it will need to overcome a ‘Double Top’ if it nears the recent high:
Implications for FX pairs: the USDX monthly triangle trend line is a major resistance area and has the potential to reverse the index. This will have obvious implications for the following pairs as they navigate looming S/R levels of their own.
E/U: a Bear Flag looks to have started here but 1.25 support could kick in if the USDX reverses. Weaker than expected French Manufacturing PMI is putting pressure on this pair. German data is due out soon too.
A/U: a Bear Flag is still building here but 0.865 support could kick in if the USDX reverses.
Kiwi: a Bear Flag looks to have started here too but 0.77 support could kick in if the USDX reverses. NZD CPI data today was weak but traders need to watch out for Friday’s NZD Trade Balance data as well.
U/J 4hr: any continued rally with the USD would help to develop this bullish ‘inverse H&S’ and to trigger a break above the 4hr Cloud:
Cable: this pair reversed from the key resistance intersection I had discussed in my w/e analysis and the 1.60 level is coming under pressure again. GBP Retail Sales data, due out in under 2 hrs, will be keenly watched here. A weak data print might see the 1.60 support give way:
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