US Dollar Technical Analysis: Nearing Very Long-term Resistance
USD TECHNICAL OUTLOOK
- US Dollar Index (DXY) broke out of range
- Has major long-term trend-line just ahead
- Test of top of range may provide support
US DOLLAR TECHNICAL ANALYSIS: NEARING VERY LONG-TERM RESISTANCE
The US Dollar Index (DXY) finally broke out of a trading range it had been creating for almost a month. The resolution to the top-side was anticipated given the direction of the overall trend. Not far ahead lies a very important trend-line dating back over two decades.
The 2001 to current trend-line runs down from 2001 over the top of the March 2020 spike-high. Given the massive catalyst behind the 2020 high it boosts the trend-lines importance even if it only has the bare minimum connecting points to be considered a trend-line.
One scenario that could play out before arriving at the long-term threshold, is a test of the top of the range as support. Old resistance is viewed as a potential source of support. A dip back to the 99.41 area could provide an entry spot for would-be longs.
As long as the top of the range holds on a daily closing basis, then the outlook will remain bullish. A reversal through the top of the range, though, could lead to a swift decline as the market is caught wrong-footed.
A rise up to the trend-line could bring some big volatility. If this is indeed the case, and if a big turnabout occurs, then it could shift the focus lower for the dollar. A bridge we will cross should we get there. For now, focusing on a potential range retest and how that plays out.
US DOLLAR INDEX (DXY) DAILY CHART
DXY Chart by TradingView
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