FX.co ★ USDX: Daily analysis for May 24, 2013

Daily chart: The USDX had a bearish day yesterday, making a bearish rebound in resistance level at 84.22, falling to support at the 83.74 level. Now this market is bouncing on that level and it is expected to climb back up to the resistance level 84.22. However, there is a possibility to break the support at the level of 83.74 and fall to the level of 83.22. We must be very careful about the swing trading that can be done in the USDX, because the indicator MACD is in positive territory but showing signs of extreme overbought, so that consolidation on the daily chart, it is quite normal and is a clear indication of the possible formation of a lower high pattern to break the resistance level at 84.22.

H4 chart: The USDX formed a engulfing candlestick below resistance level at 84.47 and forming a support near the level of 83.50. That engulfing candlestick is indicating us that the USDX will move in a low range during the session today, because this market is making a lower high pattern on the daily chart. For now, the USDX remains above the 200 SMA, supporting a bullish outlook on this market. This week, the USDX made moves on a relatively low range, so we might expect stronger movements for the next week. The MACD indicator is in negative territory, but is showing signs of weakness in the short term bearish trend, which would support the hypothesis that the USDX will bounce on supports where it is today.

H1 chart: The USDX bounced off the 200-day moving average and the support level at 83.73, having fallen from the resistance at the 84.37 level. Now, it has formed a Point of Control (POC) in the current price (83.91) and if the USDX breaks this POC and resistance levels at 84.03, 84.18 and 84.37, it is expected to rise to the level of 85.00. Furthermore, there is a possibility that the break of USDX support at the level of 83.73, which is the moving average of 200 and if breaks it, it is expected a fall to the next support at the level of 83.27. The MACD indicator is in positive territory and showing much strength in the overall bullish trend, which supports our bullish outlook for this market.

Fundamental Outlook: For today's session, we just have to be alert to the release of the Core Durable Goods Orders m/m in the United States at 12:30 GMT (Previous: -1.5% / Forecast: 0.6%). If the current reading is higher than the forecast, the USDX could do bullish movements.



Trading recommendations for today: Based on the H1 chart, place SELL (short) orders only if the USDX market breaks with a bearish candlestick, the support level is at 83.73, take profit is at 83.45, and stop loss is at 83.90. Place BUY (long) orders only if the USDX market breaks with a bullish candlestick, the resistance level is at 84.03, take profit is at 84.18, and stop loss is at 93.90.