FX.co ★ #USDX analysis for October 22, 2013

The Dollar index is trying to move higher. The upward corrective bounce is still in force and we could see the index move higher towards 80.05. This upward move is a correction. This upward move is not an impulsive move as prices are rising in an overlapping pattern.

As long as prices trade above the upward sloping trendline, we should see higher levels near 80.05-80.15. If the trendline is broken, we should see another leg down to test the recent lows. We expect this upward bounce to continue higher still to test 80.05. Once this upward move completes the bounce, we should expect another leg down to new lows.

The longer-term trend remains down and this is supported by the lower lows and lower highs pattern and the negative slope of our Moving Averages. We remain bearish for the longer-term trend as long as prices stay below 80.75. Target is now at 79.25-79.