US Dollar Index Closing in on Resistance
According to the US Dollar Index, the buck rallied for a fourth consecutive week in recent trading, adding +0.8%. This follows a punchy rebound from support at 99.67 on the monthly chart in July (complemented by two neighbouring Fibonacci ratios [38.2% and 61.8%] at 98.72 and 98.95, respectively). August has added +1.0% MTD.
Regarding the trend on the monthly and daily timeframes, my outlook remains unchanged from previous writing (italics):
The monthly scale reveals that price action has been northbound since bottoming in 2008 at 70.70 if one focusses on the longer-term swings. Q4 (2022), as you can see, printed a noteworthy correction from 114.78 (from channel resistance), which remains active in 2023. Consequently, this timeframe remains USD positive in the longer term.
Predictably, due to the fractal nature of the markets, the Q4 (2022) correction on the monthly chart has displayed a visible downtrend on the daily chart, which also remains active.
Technical structure on the daily timeframe has seen price end north of the nearby 50-day simple moving average at 102.23 (as of writing) to come within touching distance of resistance at 102.92 (the high of Friday’s candle reached 102.91). Complementing the aforementioned base is trendline resistance, drawn from the high of 114.78, and the 200-day simple moving average, currently circling 103.34.
As a result of the above-noted analysis, the combination of daily resistance from 102.92, daily trendline resistance, and the 200-day simple moving average deliver a resistance zone between 103.34 and 102.92 to be conscious of this week. While the daily timeframe’s downtrend bolsters a response from here, the caveat is that the monthly timeframe’s technical picture displays an uptrend and a recent rebound from support, consequently indicating a breakout higher could be in the offing. As a result, interested sellers at current daily resistance are likely to seek additional confirmation before pulling the trigger. On the other hand, a higher breakout north of daily trendline resistance (as the monthly timeframe suggests) will likely spur breakout buying on the daily scale, targeting at least 103.54 tops (July 2023).
Regarding the trend on the monthly and daily timeframes, my outlook remains unchanged from previous writing (italics):
The monthly scale reveals that price action has been northbound since bottoming in 2008 at 70.70 if one focusses on the longer-term swings. Q4 (2022), as you can see, printed a noteworthy correction from 114.78 (from channel resistance), which remains active in 2023. Consequently, this timeframe remains USD positive in the longer term.
Predictably, due to the fractal nature of the markets, the Q4 (2022) correction on the monthly chart has displayed a visible downtrend on the daily chart, which also remains active.
Technical structure on the daily timeframe has seen price end north of the nearby 50-day simple moving average at 102.23 (as of writing) to come within touching distance of resistance at 102.92 (the high of Friday’s candle reached 102.91). Complementing the aforementioned base is trendline resistance, drawn from the high of 114.78, and the 200-day simple moving average, currently circling 103.34.
As a result of the above-noted analysis, the combination of daily resistance from 102.92, daily trendline resistance, and the 200-day simple moving average deliver a resistance zone between 103.34 and 102.92 to be conscious of this week. While the daily timeframe’s downtrend bolsters a response from here, the caveat is that the monthly timeframe’s technical picture displays an uptrend and a recent rebound from support, consequently indicating a breakout higher could be in the offing. As a result, interested sellers at current daily resistance are likely to seek additional confirmation before pulling the trigger. On the other hand, a higher breakout north of daily trendline resistance (as the monthly timeframe suggests) will likely spur breakout buying on the daily scale, targeting at least 103.54 tops (July 2023).
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