I hope that you all had a great week last week and are enjoying the downtime to get ahead for the new week.
In this article we will be taking a look at the US Dollar index and where we could see price go over the next week.
Just to reiterate what i have mentioned in previous posts, the reason i look at the US Dollar index is to highlight whether the Dollar is showing strength or weakness to be used in correlation with USD pairs.
Before we take a look at the daily chart it is key we take note of the Monthly candle close of February which closed as a bullish candle however did show some selling pressure.
Also we must take note of the weekly candle which has closed as a bullish pin bar.
Now lets take a look at the daily chart below where you should be able to see that price recently showed a new lower low at the 12100 weekly support. Price was rejected at this area and has broken above the previous lower high to the upside where we have now seen a new higher high. Price over the last few weeks has shown a retracement back to the downside where last week we saw price rejected off the 12144 daily support. This has now taken price back up to the resistance area of 12200.
Friday’s candle closed as a bullish candle with even wicks on the top and bottom.
Now going down to the 4 hour timeframe we can see that price has closed above the area of 12200 and the market structure is still printing lower highs and lower lows and therefore the downside momentum could continue from the area price has closed at.
The previous lower high which is marked with a 4 Hour support/resistance line at 12230 is key. If price breaks above this area then technically we have trend changing movements and we could then see a lot more further Dollar strength. We need to always keep in mind the weekly candle close which closed as a bullish pin bar, this could give price the push to break the 4 hour resistance at 12230.
However if price remains below this area and breaks back below the 12200 support then we could see further downside which means weakness for the USD.
I hope that this gives you an insight into where we could see the US Dollar index head over the next week. I have analysed this pair using pure simplicity and price action.
James at Technical FX