US Dollar Technical Analysis: Resolution of the Range May be Nearing
USD Technical Outlook
- US Dollar Index (DXY) held noteworthy support
- Still stuck in a range but that may soon give-way
- Trend direction suggests range will resolve upward
US Dollar Technical Analysis: Range-break May Be Nearing
The US Dollar Index (DXY) ran into a familiar area of support last week and is coming off of it with vigor. The area right around 97.70 continues to grow in importance as it has been tested and held as support three times since it was created on the Feb 24 Russian/Ukraine spike-high.
There is a slope that runs through the vicinity as well, extending over from the November peak. This all adds up to a very sturdy range floor, and given the overall trend is higher we should see an eventual resolution to the top-side above 99.41.
But until it breaks out the outlook is neutral with a bias towards range-trading. Chasing longs and shorts within a range is a recipe for getting chopped up. So for now, unless playing shorts off the top of the range and longs off the bottom of it, we need to continue to be patient.
A daily close above 99.41, in-line with the broader trend, will have the 2001-present trend-line in focus as the next major line of resistance. We may see a breakout and run or a breakout and retest before running. In either event, out of the range with the trend should bode well for the DXY. Of course a false breakout could occur too that results in a reversal, but we’ll only worry about that scenario should it arise.
On the flip-side, if we see a breakdown below support under 97.68 on a daily closing basis, given how many times we have seen the DXY turn from this point over the past five weeks, we could see a sudden rush for the exits. The next line of support in this scenario arrives at the trend-line off the May low.
US Dollar Index (DXY) Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.