US Dollar Index Analysis November 2016 (W,M)
Created on Monday, 31 October 2016 11:47
Written by Austin Galt
The bearish scenario outlined in previous analysis looks to have been negated…for now. So, let’s review the weekly and monthly charts.
US DOLLAR INDEX WEEKLY CHART
Price has generally been trading sideways since the top in March 2015. Since that top price has traded marginally higher before trading back down and marginally breaking below the previous swing low.
Technically, the breach of previous swing highs and lows has set up a 5 point broadening top with the recent low the point 4 low. I had spotted this but still wanted to give the bearish scenario a chance to follow through. It didn’t and price now looks headed to a new point 5 high which should surpass the previous high of 100.60.
Now that price looks to have turned back up I am focusing on this broadening top scenario.
The Bollinger Bands show price at the upper band and it would not surprise to see a little correction back to the middle band before price moves up once again.
The Fibonacci Fan shows the 50% angle providing resilient support. Perhaps the point 5 high will be back out around resistance from the 38.2% angle a bit further down the track.
The RSI is in overbought territory while the MACD indicator is bullish although the averages have diverged a bit so some regression to the mean may be in order.
US DOLLAR INDEX MONTHLY CHART
The Bollinger Bands show price making a solid move above resistance from the middle band and, while a move back down to test this band which should now act as support, I favour a move up to the upper band.
The Fibonacci Fan show price is back at resistance from the 23.6% angle however the move up to this angle looks more solid than it did a few months ago whereby price turned back down immediately.
The horizontal line denotes the previous swing high and I am looking for a false break high to form just above this level of 100.60.
The RSI is back in strong territory and a new price high would likely form another bearish divergence.
The MACD indicator is still bearish but the averages are now right back together.
Summing up, while I still believe a substantial correction will occur, I expect it to be delayed for a while as price gets its current bullishness out of its system. We can look at how any correction may play out at a later date.