The US Dollar Index ($USD) was hit hard this week with a 2.2% decline. Weakness in the Dollar buoyed oil and stocks, which have been negatively correlated with the greenback. Dollar weakness and Euro strength is also associated with the risk-on trade. Despite this week's decline, the bigger trend is still up and support is close at hand. The first chart shows weekly prices with a Double Bottom breakout in September $USD broke resistance with a strong surge that was confirmed by RSI, which broke to its highest level in a year.
Click this image for a live chart.

The second chart shows more details with a daily candlestick chart. There are three reasons to expect support soon. First, broken resistance in the 76 area turns into support. A "throwback" to broken resistance is not uncommon after a breakout. Second, a move to the 76 area would retrace 61.80% of the prior advance. Third, RSI moved into the 40-50 zone. This area acts as support during and uptrend.

Click this image for a live chart.


Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
Subscribe to ChartWatchers to be notified whenever a new post is added to this blog!
comments powered by Disqus