Dollar Index: 200-Day SMA Support This Week?
Dreadful Week for the US Dollar
Down -1.9% against a basket of six international currencies, the US Dollar Index erased the prior week’s upside move last week and pencilled in its most significant one-week decline since July. MTD, the Dollar Index is also down -2.7% and on track to snap a three-month winning streak.
Direction Going Forward?
The monthly timeframe is limited regarding technical structure; we’re trading in no man’s land right now. Aside from October’s peak at 107.35, resistance calls for attention at 109.33 and support is not expected to enter the fray until we dip a toe back under 100.00 to 99.67. However, what the monthly timeframe does display is the longer-term trend, which is north alongside momentum remaining positive (> 50.00), according to the Relative Strength Index (RSI).
So, while the trend is indeed higher on the monthly scale, there’s still a chance that price could dip beneath 100.00 before finding any technical support.
Across the page on the daily timeframe, you will note that the Index is hugging the lower band of the Bollinger Band (set to two standard deviations based on a 20-day simple moving average). You will also acknowledge that the unit ended the week within striking distance of the 200-day simple moving average (currently at 103.62) after drilling through support at 105.04 earlier in the week (now a marked resistance level).
With a lack of support on the daily timeframe until the 200-day simple moving average and the RSI revealing space to close in on oversold territory, a push lower this week to reach the aforementioned moving average may be seen where buyers could attempt to defend. At the point of testing the moving average, the RSI is likely to be oversold, and this, together with support from the lower Bollinger Band, might be enough to prompt buyers despite the daily timeframe working with a downtrend since topping at 107.35. Alternatively, another potential scenario to consider this week is that a close south of the 200-day simple moving average will not only re-open the risk of a return to daily support at 102.16 but will potentially ignite bearish breakout opportunities.
Down -1.9% against a basket of six international currencies, the US Dollar Index erased the prior week’s upside move last week and pencilled in its most significant one-week decline since July. MTD, the Dollar Index is also down -2.7% and on track to snap a three-month winning streak.
Direction Going Forward?
The monthly timeframe is limited regarding technical structure; we’re trading in no man’s land right now. Aside from October’s peak at 107.35, resistance calls for attention at 109.33 and support is not expected to enter the fray until we dip a toe back under 100.00 to 99.67. However, what the monthly timeframe does display is the longer-term trend, which is north alongside momentum remaining positive (> 50.00), according to the Relative Strength Index (RSI).
So, while the trend is indeed higher on the monthly scale, there’s still a chance that price could dip beneath 100.00 before finding any technical support.
Across the page on the daily timeframe, you will note that the Index is hugging the lower band of the Bollinger Band (set to two standard deviations based on a 20-day simple moving average). You will also acknowledge that the unit ended the week within striking distance of the 200-day simple moving average (currently at 103.62) after drilling through support at 105.04 earlier in the week (now a marked resistance level).
With a lack of support on the daily timeframe until the 200-day simple moving average and the RSI revealing space to close in on oversold territory, a push lower this week to reach the aforementioned moving average may be seen where buyers could attempt to defend. At the point of testing the moving average, the RSI is likely to be oversold, and this, together with support from the lower Bollinger Band, might be enough to prompt buyers despite the daily timeframe working with a downtrend since topping at 107.35. Alternatively, another potential scenario to consider this week is that a close south of the 200-day simple moving average will not only re-open the risk of a return to daily support at 102.16 but will potentially ignite bearish breakout opportunities.
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