USDIndex: Bearish channel emerged yet several bullish support line still languishing under current prices
The daily candle chart below shows the medium term price history for the USDIndex - which is a contract for difference (CFD) that aims to track the underlying US Dollar index (DXY). Today the index is trading around 95.14 around time of publication.
last time USDIndex was reviewed in Ideas You Can Trade on May 20th - a recovery from just above 93.00 had unfolded from several days earlier from the lower support line of what appears to be a newly emerged bearish channel (see point 3 in red on chart below).
If the lower line of this new channel is revisited then 93.00 will be reached again in the near-term. Whereas, if support holds on the several intersecting medium-term bullish support lines that are under current prices - then the lower side of the bearish channel may be avoided first.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 95.87 with a Limit to take profit @ 96.25 and a stop-loss @ 95.51 Risk/Reward Summary: Limit risk = 38 points profit / (-36) Stop-loss risk = Gain to Loss Ratio = 1.05
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 94.72 with a Limit to take profit @ 94.28 and a stop-loss @ 95.06 Risk/Reward Summary: Limit risk = 44 points profit /(-34) Stop-loss risk = Gain to Loss Ratio = 1.29
Medium Term Daily Candle Chart:
Medium Term Daily Candle Chart (zoomed-out):