USD TECHNICAL OUTLOOK:
- DXY tested and held slope from June.
- Currently trading in open space with room to run.
US DOLLAR TECHNICAL OUTLOOK REMAINS BULLISH
Last week the US Dollar Index (DXY) broke through a line of resistance and within a couple of days tested that level to confirm it as support (old resistance becomes new support). The top-side slope running higher since June was a worthy level to watch with all the inflection points.
The powerful rally off the slope on Friday has the DXY looking higher as long as support holds. There is a bit of room to run here as there isn’t any meaningful resistance to speak of until the swing high from June of last year is met at 97.80.
It’s not a huge level but is nevertheless a level of meaning. But we won’t worry about it until it becomes relevant. When (if) it comes into play as per usual what will matter is how price action and momentum plays out.
From a tactical standpoint, holders of longs from lower levels may want to use the June slope as a threshold to determine when/where to trail up with stops. Would-be longs my want to see if the DXY can either test support or at least consolidate above it for a few days before taking an entry. The June slope used to determine stop placement.
Shorts hold no appeal at this time as both trend and support aren’t favorable for bearish bets based on the view outlined above. It would take a hard break through support and then perhaps a failure on a rally to spark some selling interest. But even then the trend is still steadily higher and it will take some work to turn the tone bearish.
US DOLLAR INDEX (DXY) DAILY CHART
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Written by Paul Robinson, Market Analyst, 22nd November 2021. DailyFX