USD Hits Important Support And Is Primed For Upswing
Przemyslaw Radomski, CFA | Oct 11, 2019 03:04PM ET
The USD Index is setting itself up for a sizable move that we won't watch disinterested. The charts have sent their message, upon which we have acted. Let's assess the outlook for the days ahead as it stands right now.
Today, we will cover the USD Index as opposed to the individual currency pairs. It's also tradable, as there are futures on it (DX symbol) as well as ETFs, for instance the UUP and the UDN.
In short, based on the overnight decline to the previous lows and the rising support line, Thursday's waiting order has been executed, opening the long position in the USD Index.
Let's take a closer look.
The USD Index declined in a visible manner Thursday and it moved a bit lower on Friday as well. At the moment, the USD is trading at 98.36, so the new long position is almost flat (profitable, but very insignificantly). No wonder - the position is open for less than 24 hours so far and its potential is likely to be realized in the following days (or weeks, if you choose to follow the medium-term trade).
h3 Double Support/h3The early October low and the rising red support line based on the August lows is likely to trigger a reversal, just as it did in September. Please note that, just as it was the case in September, the USD Index might move below the red line temporarily (perhaps to the 50-day moving average at about 98.15 or so) before rallying. Such a move would not invalidate the bullish setup at all.
Our comments on USD's long-term charts remain up-to-date:
Why are we focusing on the long positions in the USD Index? Because of the long-term trend, which remains up.
Get The News You Want
The USD Index is after a major long-term breakout and this breakout was already verified a few times. The most recent rally is just the very early part of the post-breakout rally. Much higher USD Index values are likely to follow in the upcoming months.
The long-term trend is up as even the dovish U-turn by the Fed, rate cuts, and myriads of calls from President Trump for lower U.S. dollar and much lower (even negative) interest rates, were not able to trigger any serious decline.
What we saw instead was a running correction that's the most bullish kind of corrections. It's the one in which the price continues to rally, only at significantly smaller pace.
Thank you.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.