FX.co ★ #USDX analysis for January 10, 2014

The U.S. Dollar Index is battling hard with the important resistance area of 81-81.50 we are mentioning for so long. This is good for traders as it cofirms how important a resistance level is. There are two ways to treat such a situation. Either wait for the confirmation of the break out and go long, or go short and reverse position when prices confirm an upward break out. We have seen several times before in the dollar index that when a resistance rejectes prices, strong reverse movement follows. In this case, rejection to break upwards, could bring more selling pressures to push prices to 80 or 79.

Short-term resistance is found at 81.30. Short-term support at 80.65. Important support for bulls is 79.70. Important resistance level for bears is 81.50.

The price formation in the daily chart favors the bulls and there is a possibility that prices will finally manage to break above 81.50 and reach at least 82.5-83. However, without a clear and confirmed break out we have to remain neutral or take short position with a stop reverse at 81.50.