USD index analysis and forecast

dollar index daily chart
USD index daily chart - 17th December 2010

The USD index is now at a critical point from a technical perspective, having closed on Friday with a wide spread up candle, which broke and held once again above the short term moving averages, and the psychological 80.00 level, to close the day and the week at 80.362. Ahead we have three key price levels, which could bring a halt to the recent rally for the dollar, and the first of these is now directly ahead in the 80.50 price region, where some short term potential resistance awaits. The next level is the 200 day moving average which is currently sitting at 81.76, and here again this has the potential to provide a barrier to the upwards momentum. Finally, if both these areas are cleared, then further deep price resistance awaits between the 82.50 and and 83.50 region, and any clearance here will then open the way for a longer term sustained upwards trend for the dollar index and the US currency.

Last week’s price action on the daily chart was dominated by the hammer candle on Tuesday, with the 40 day moving average providing a strong platform of support and helping the index to bounce back from the this test to the down side early in the week, which was duly validated on Friday. With this key indicator pointing sharply higher, the longer term outlook looks promising, and provided we see the above levels breached then all four moving averages should work in tandem once again, and provide the platform of support required for a longer term rally for the index in due course.

About Anna 1036 Articles
Hi – my name is Anna Coulling and I am a full time currency, commodities and equities trader. I have been involved in both trading and investing for over fifteen years and have traded many different financial instruments, from options and futures to stocks and commodities. I write and publish articles ( mostly for free ) for UK and international publications on a wide variety of financial issues, and in particular I enjoy helping others learn how to invest and trade.

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