Sophia Todorova has a background in teaching and psychology, and as such relishes the idea of assisting new traders on their journey to Forex trading success. Technical Analysis is her passion. The charts speak, and she listens.
The US dollar index is currently testing the top of a daily range that has been in place for the past 3 weeks. The range support can be found at 79.50 level, where it pulled back to, and established support above broken resistance. The range resistance is at 80.80, and is a major obstacle that needs to be overcome for the index’s extension towards 81.90. Another resistance level marked on the daily chart below is 83.50.
Technically, it seems that we will witness phenomenal dollar strength, as it gears up for a breakout. However, if 80.30 were to hold as resistance, the likelihood would be strong for a move back towards 79.70s. In order for the range resistance break to be confirmed, a daily close is needed above 80.80, where, once breached, the previous range resistance will converge with the daily up trendline to provide support.
Undoubtedly a breakout such as is suggested by the charts, would have implications for broad weakness amongst other currencies against the dollar. The dollar index is a great tool that can be used as a means of confirming trades on the currency pairs, so it is always a good idea to be aware of its technical setups.
I hope you have found the article useful. Happy trading!
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