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USDollar Technical Analysis: Strongest 2yr Gain Since 1984 Faces Resistance

USDollar Technical Analysis: Strongest 2yr Gain Since 1984 Faces Resistance

Tyler Yell, CMT, Currency Strategist


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Talking Points:

  • USDollar Technical Strategy: Respect the 6 Month Range Resistance
  • March 13th, 2015 Daily Range Looked To As Defining Resistance
  • Higher Lows Favor Ascending Triangle Until Support Breaks

Even the experts are mixed on the next big move on the USDollar. If the trend is your friend until it ends, the end doesn’t appear in sight yet, although a speed bump is definitely in the road if not an outright wall. The current multi-month move is the strongest since 1984, which lead to the Plaza Accord where a co-ordinated effort brought the USD lower. The undefined speed bump or wall is the March 13th, 2015 daily range looked to as defining resistance. Throughout the majority of 2015, USDOLLAR has found an inability to break above this level for a variety of fundamental reasons. Either way, it appears a series of higher lows is going to bring a pivotal test for the USDollar where either a triple top will be cemented or a salute to the 11,000 level as we move definitively into the 12 handle for the foreseeable future.

The resistance range in focus is 12,064 up to 12,149. We’ve only seen one break above that level on April 13th and that lasted for around three hours before a month-long slide down near the 2015 low of 11,634, which is labeled as ‘W’ on the chart below. From there we’ve had 11,732 and 11,789 as key higher lows and it looks possible that 11,964 is the next higher low. This is shaping out as an ascending triangle and the bullish case remains favored until a higher low is taken out. However, the above resistance of the March 13th range is formidable but a break above there could send this incredible trend continuing higher.

Should a daily close above 12,059 happen this week, we will look for a test of the 12,064/12,149 range. The correlated US 2yr Yield has reached 0.786%, the highest since April 2011. The high of that same month in the 2yr yield was 0.89%. A move higher to those levels could take USDOLLAR along for the ride. Looking purely at the technical picture, only a break below 11,789 would alter the ascending triangle view however an intraday break below 11,943 (the 50% retracement of the 11,789 and 12,096 range) would turn us neutral until clarity appears. T.Y.

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