Dollar Index Analysis
- The dollar index started the week with a breakout above the 80.00 area range highs; the market has rejected the higher prices around the 61.8% Fibonacci retrace level and is retesting the 79.76 PPZ that has been highlighted below.
- Price action alone is suggesting a move below the PPZ could take place during early week trading as the candle from Friday has closed near range lows. This comes in the context of a medium term uptrend and a strong close below the pivot would be required before we looked for further downside. Price has pierced the level on numerous occasions before but a close above/below was needed before a direction was chosen.
- Any move to the downside would have us looking towards the 78.30 area for bullish price action setups as this has held price on two recent attempts to move lower. This area has Fibonacci confluence in place.
- Upside resistance is seen around 81.00 and then at the 81.85 area (aligned with the previous swing high).
- Fridays range came in at 72 pips which is 124% of the ADR over 60 days. This is in contrast to the weekly range which was 68% of the AWR at 107 pips. A continuation of the volatility from Friday could see an explosive start to the new week.