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US Dollar Technical Analysis: Candle Setup Hints at Bounce

US Dollar Technical Analysis: Candle Setup Hints at Bounce

Ilya Spivak, Head Strategist, APAC

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Talking Points:

The Dow Jones FXCM US Dollar Index is showing tentative signs of bottoming as prices carve out a bullish Piercing Line candlestick pattern, hinting a rebound may be ahead. The currency snapped a four-day losing streak that brought prices to a two-month low after clearing support guiding the near-term uptrend from mid-May swing lows.

Confirmation of a reversal is absent for now. Prices would need to overturn the series of lower highs and lower lows established from the August 7 high on a daily closing basis to reinforce the likelihood that a bottom is indeed in place. In the interim, the path of least resistance continues to favor weakness in the near term (although as noted previously, the longer-term tendency aims upward).

Near-term resistance is currently at 11892, the 23.6% Fibonacci expansion. A break and close above this barrier initially exposes the 38.2% level at 11956 as the next hurdle for upside momentum. Alternatively, a turn below the August 24 low at 11789 clears a path to challenge the June 18 bottom at 11732.

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** The Dow Jones FXCM US Dollar Index and the Mirror Trader USD basket are not the same product.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.