The FXCM USDOLLAR Index (equally weighted basket of USD vs EUR, GBP, JPY & AUD) continues to lack much direction in a medium-term context, but there is hope that this is changing. Over the past week or so the index has triggered an inverse head & shoulders pattern (best seen on the 4-hour chart) and broken above the trendline connecting the April/June highs just under 12,000. Momentum has fallen off a bit over the past few sessions, but focus remains on the June high and the 78.6% retracement of the April/May range near 12,050 as traction above there is needed to signal the start of a more important push to the upside in the index. Weakness back under 11,920 would undermine recent positive technical developments.
Still short EUR/USD with a trailing stop over 1.1170 (closing basis).
