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The #USDIndex is at a major support zone but will the #USD begin to find some strength or will the weakness continue?
Today, we’re looking at the US Dollar Index as the price is starting to find support at the key lows.
We talked about this in the Forex Market Outlook. We looked at the weekly chart and saw that it was shaping up with the USD at -7, which means that it is weak on the strength and weakness table. But we could start to see a reversal since we are at the key supporting area.
Weekly timeframe
I noticed that the candlesticks in the weekly timeframe are getting smaller in their range. And in the past two weeks, the range of two of them could have been shallower compared to what we saw in the recent move down.
Now that the price took out this weekly, we’re starting to see a bit of rejection. It’s showing signs that we’re going to see US Dollar bullishness coming through to the market, especially if we maintain the situation that we have.
The USD index is showing signs of a bullish reversal on the weekly timeframe as the price rests at a major support. The past two weekly candles show a slow down in selling momentum, adding confluence to a reversal.
Daily timeframe
The price could form a bullish close in the daily timeframe because we have a really nice break out here. We could assume that this has been a false break out of the lows, so the market could have grabbed liquidity and is now starting to push back to the upside.
We can look for a change in trend, which would be a break above the 9015 area. If the price breaks above that, we could look for continuations to the upside. There is also a trendline resistance drawn. If the price breaks and closes above that, we could see the market again rally to the upside.
The daily timeframe is forming a bullish higher high, higher close after breaking the lows, suggesting that a reversal could be forming. The trendline resistance and recent highs are the only concern for the USD. But if the price breaks out, then we can expect buyers to step in.
Four-hour timeframe
If you want to look for early opportunities, you can take a look at the four-hour timeframe. The price formed a nice double bottom pattern there.
You’re going to want to look for the price to trade back to the double bottom neckline for support and continuation.
Alternatively, we can look for an early opportunity on the four-hour timeframe as there is potential for the price to retest the double bottom neckline and find support.
Keep an eye on the US Dollar Index, it’s starting to show signs of US Dollar strength coming back. Will it be sustained or will we see a rollover?
It will probably be sustained, but we need to see a breakout of the trendline broken first. If we do, then we can proceed to look for further long opportunities.
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