USDIndex: Bearish Pressure Pushed Today's Low To Test Lower Support Line of Medium Term Bullish Channel
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 97.38 around time of publication.
The USDIndex closed lower in each of the last six sessions - since reaching its March 13th high above 100.00. This continued after the pullback that happened in the last post in Ideas You Can Trade when the upper line of the bullish channel (see green channel on chart below) was tested.
High volatility continued from that last post - and brought the index towards 94.00 and back literally overnight on March 18th - yet the bearish pressure has caused the USDIndex to again reach the lower support line of the above-mentioned bullish channel. This is a sign that the bullish channel is being tested again by the bearish pressure or pullback within the overall uptrend (bullish channel).
If this support line fails - a return towards 95.00 should unfold, whereas if support is maintained on the line reached from today's low then the USDIndex should traded higher - and a higher close too would enable a potential reversal of the bearish momentum -if support helps the USDIndex pivot on the lower line of the bullish channel.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 97.69 with a Limit to take profit @ 98.23 and a stop-loss @ 97.20 Risk/Reward Summary: Limit risk = 54 points profit / (-49) Stop-loss risk = Gain to Loss Ratio = 1.10
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 96.55 with a Limit to take profit @ 96.01 and a stop-loss @ 96.85 Risk/Reward Summary: Limit risk = 54 points profit /(-30) Stop-loss risk = Gain to Loss Ratio = 1.80
Medium Term Daily Candle Chart: