USDIndex: Double-Top on Resistance Line Will Test Bullish Continuation or Reversal From Current Levels
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 near 95.65 around time of publication -and near session highs of 95.77.
Last week when USDIndex was reviewed in Ideas You Can Trade, the upside target of 95.75 was reiterated as a potential area of resistance where the bullish momentum should be tested. That price was reached earlier in today's session on Wednesday, as the index hit this price for a second time creating a potential double-top if it reverses from here.
If USDIndex continues its push higher a break above 95.75 should be very bullish, or support may be established above this resistance level as the prior-ceiling could become a new-floor before next move higher from here. An additional long term weekly chart below shows the intersecting long term bearish support line with the 50% Fibonacci retracement level coinciding near current levels.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 95.80 with a Limit to take profit @ 96.15 and a stop-loss @ 95.51 Risk/Reward Summary: Limit risk = 35 points profit / (-29) Stop-loss risk = Gain to Loss ratio = 1.21
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 95.12 with a Limit to take profit @ 94.79 and a stop-loss @ 95.42 Risk/Reward Summary: Limit risk = 33 points profit /(-30) Stop-loss risk = Gain to Loss Ratio = 1.10
Medium Term Daily Candle Chart:
Longer Term Weekly Candle Chart: