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Today’s Trading Edge: US Dollar Index approaches major support level



The US dollar has spent the last three weeks in a choppy decline as investors await to see if the Fed will give a clear sign on when liftoff will occur.  If we are led to believe that Fed will raise rates at the September meeting, the U.S. dollar may see a strong round of bullish momentum. 

The end of May rally made a key high at $97.88, which was the second major lower high that price made since the record bullish rally stalled at the March 13th high of 100.785. 

Price action on the 240-minute chart is showing that a confluence of support may come from $93.80 - $94.25 region.  If the bearish retreat continues, we may look for a major bullish reversal to stem from both a potential bullish Gartley and Butterfly patterns.  Initial upside targets include the 100-day SMA, which is trading at $96.34.  Major resistance will once again come from the century mark. 

If the short-term bearish trend continues and invalidates the reversal patterns, key support will come from the $93.00.  A breakdown below there could see the currency pair target the $90.00 handle.      

The trade: Buy Dollar Index at 94.00 with a stop loss at 93.50 and a take profit at 96.00.  The Risk/Reward Ratio is 1:4. 

Edward J. Moya

Technical Strategist

WorldWideMarkets Online Trading

Forex Trading Demo

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