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US Dollar Breaks Above Weekly Resistance

US dollar strength on the short-term chart is now punching through long-term resistance as well.

Figure 1 shows the US Dollar Index futures (DX) pushing past the 2013 high.

Figure 1. US Dollar Index Futures - Weekly Chart


85 is now the level to pay attention to. In early 2013 the price structure was very similar to what it is now. The price broke out of a sideways channel and then moved past the former high (2012 high). That attempt at a definitive breakout failed.

The next major resistance hurdles on the weekly chart are just below 88. This is based on the descending major highs seen since 2009. The 2009 and 2010 highs form the next resistance zone, between 89 and 90.

Right now, 85 acts a pivot. Even though there is room on the upside, after such a strong run, wait to see how the price reacts near this level. A continued push to only 85.50 (or so) and then a drop back below 85 triggers a short trade (failed breakout), with a stop above the recent high. 83 is a decent target, 82 is getting very aggressive.

The real goal is to get long though, and participate in the uptrend. A pullback to 82 would be a blessing, with a tight stop and a first target at 85, holding part of the position for a legitimate long-term break higher.

That pullback may not occur. A consolidation on the weekly chart, followed by break above that consolidation is also an entry method. If that consolidation occurs near current levels, then look to start taking profits just below 88.


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