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Dollar Index Analysis 22/8/11

USDX technical analysis

The US Dollar index is still caught in a consolidation phase and the key 75.00 resistance has held price for now.  There is a clearly defined support area forming around 73.40 which could be an important level heading into the new week.

Dollar Index Daily Chart

dollarindexsupport73 40 thumb Dollar Index Analysis 22/8/11

- There has been clear demand seen around 73.40.  My previous post referenced this as “potentially holding price if seen again on a drop below 74.00”.  This level did hold price and has now become a defined horizontal support level and should be monitored accordingly.

- A breakout below 73.40 would bring the 72.69 4/5/11 level into play and would be my first target on a break of the key support level.

- Further to a break below 72.69 the FE61.8% expansion of 81.53 > 72.79 >76.71 is aligned with the 13/7/2008 weekly low at 71.30.  This confluence area could potentially see support and is the last major level before the 16/3/08 70.69 dollar index all time low.

-  On the upside;  75.45  held as resistance on 5/8/11.  This is the 61.8% Fibonacci retrace of 73.41 to 76.71.

-  The 12/7/11 high at 76.71 is the next significant resistance level if a break of 76.00 transpires.

Price action at the 73.40 area is key heading into the new week.  A sustained break below would bring the all time dollar index low of 70.69 into view for US dollar bears.  Price is currently at 74.08 and a move back up to the 75.00 may well see a continuation of the recent range-bound trading.  Overall positioning remains bearish.

Dollar Index Weekly Chart

dollarindexweekly22 8 11 thumb Dollar Index Analysis 22/8/11

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