FX.co ★ #USDX analysis for January 23, 2014

The Dollar index has been rejected once more at 81.50 and this is not good for bulls. The index has broken its short-term trend line that supported the bullish trend. As we mentioned in previous posts, the 81.50 price level is the most important resistance as this was the previous important high. Bulls will need to break above it in order for the bullish trend to remain valid.

The Dollar index as shown in the chart above has broken short-term support. The rise from 79.75 is not a clear impuslive move. Important support level is 80.40. If price moves below that level then we could expect more selling pressures to arise. The index should find support at 80.40 and at 80.25.

The daily chart shows how the daily support level is being tested. If this is a one day correction, then everything is good for bulls. If however selling pressures continue, then we should expect the index to reach the 80.40 very soon. This important support. Short-term traders should not have open long positions as our short-term stop was hit when the index fell below 81.05 where our trend line was. Longer-term traders should have 79.75 as stop and look to buy after this pullback.