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U.S. DOLLAR INDEX GETS A BOUNCE

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The U.S. Dollar Index ($USD) remains in a long-term downtrend, but the index is showing signs of strength with a consolidation breakout this week. After becoming oversold in March, the index firmed for 6-7 weeks and surged above its mid March highs this week. StochRSI moved below .20 in late February, firmed a few weeks and then broke above its mid point (.50). These breakouts opens the door to an oversold bounce that could extend to the 75-78 area.

There are a number of factors pointing to resistance around 75-78. First, the trendline extending down from January-February 2007 comes in around 78. Second, the December 2007 high marks resistance around 78. Third, the falling 40-week moving average marks resistance just above 76. And finally, the January-February consolidation can also act as resistance around 76. Taken together, I am marking a resistance zone around 75-78 for the upside target.

Chip Anderson
About the author: is the founder and president of StockCharts.com. He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. Since 1999, Chip has guided the growth and development of StockCharts.com into a trusted financial enterprise and highly-valued resource in the industry. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at StockCharts.com, and provides updates about new features or additions to the site. Learn More
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