FX.co ★ bryana.reichert | U.S. Dollar Index (USDX) in Forex Trading

#USDX Timeframe Daily

Based on the US Dollar Index (USDX) chart on the Daily timeframe, conditions show that the U.S. dollar index is currently in a corrective phase after previously posting a fairly significant rally that reached a peak in the 101.78 area. The selling pressure that emerged at the beginning of August pushed the price down to the 99.80 area, causing the index to retest an important zone that coincides with the 100-period Moving Average (MA) and the 200-period MA. This condition indicates that USDX is entering a decision phase, where the price reaction to these two moving averages will be the main factor determining whether the medium-term bullish trend can still be maintained or instead begins to reverse into a bearish trend. Judging from the position of the moving average indicators, the 100 MA, marked by the blue line, still has a positive slope even though it has started to flatten after the rally that has been underway since mid-May. Meanwhile, the 200 MA, marked by the red line, is moving up gradually and is now located not far below the 100 MA. The price is currently moving between these two indicators, indicating that a balance between buyers and sellers is starting to form. Such a condition generally reflects a consolidation phase after a fairly volatile move. As long as the price is able to hold above the 200 MA, the medium-term trend can still be categorized as positive. However, if selling pressure continues and convincingly breaks below the 200 MA, the probability of a trend reversal will increase. The candlestick structure on the chart shows a fairly clear change in market character. After recording consecutive gains up to near the 101.78 area, several bearish candles with relatively large bodies appeared, indicating that profit-taking activity has begun to dominate the market. This decline brought the price back to the psychological support area around 99.80. Interestingly, after reaching that level, selling pressure began to subside and the candle bodies became smaller. This indicates that the market is searching for a new equilibrium, while market participants wait for the next catalyst to determine the next direction of movement. The first horizontal support area is at the 99.33 level. This zone is a very important support because it is close to the position of the 200 MA and is also an area that previously acted as resistance before finally being broken at the end of May. As long as the price is still able to hold above that level, the chance for a rebound remains open. If selling pressure increases again and the price closes below 99.33, then the next downside target is in the 98.71 area. This support plays an important role because it has acted several times as a bounce point for price during the March to May period. If the 98.71 support also fails to hold, then the downside room will open further toward the 97.58 area, which is a major support in the medium-term trend structure. On the upside, the first resistance is at the 100.31 level. This area previously acted as fairly strong support before it was broken by selling pressure and thus has now turned into resistance. If the price manages to rise again and close above that level, then the potential for a recovery toward the next resistance in the 101.05 area will increase. The 101.05 resistance is a level that has several times acted as a consolidation point before the price continued its rise toward the peak at 101.78. If buyers are able to break through the 101.05 area with strong momentum, then the next target is the major resistance at 101.78. A breakout above that level will confirm that the bullish trend has regained new momentum and opens the door for further strengthening toward higher psychological levels. From the perspective of trend structure, the rally that started in February has not completely lost its validity. The sequence of higher lows and higher highs is still generally visible on the chart, although the latest correction has eroded much of the short-term bullish momentum. As long as the price remains above the 200 MA and the main horizontal supports, the ongoing decline can still be viewed as a retracement within a larger uptrend. However, if the price continues to move below the 200 MA accompanied by the formation of a new lower low, then the bullish structure will begin to weaken and increase the probability of a bearish trend forming. The relationship between the 100 MA and the 200 MA also shows that the medium-term trend has not undergone a significant change. The 100 MA is still above the 200 MA, indicating that the primary trend still favors buyers. However, the distance between the two moving averages has begun to narrow due to the price correction in recent days. Therefore, market participants need to closely watch whether the price is able to move back away above the 100 MA or instead breaks below the 200 MA. The price response to these two indicators will be an important signal regarding the direction of USDX in the coming weeks. Overall, the technical analysis of USDX on the Daily timeframe still shows a medium-term bullish bias, even though it is currently undergoing a fairly deep correction. The support area at 99.33 is the main foundation that must be maintained for recovery prospects to remain open, while the resistances at 100.31, 101.05, and 101.78 are the upside targets that need to be broken to confirm the continuation of the uptrend. As long as the price is still able to hold above the 200 MA and does not consistently break the main supports, the ongoing correction can still be viewed as part of a consolidation process before the market decides its next direction. However, if selling pressure continues to increase and pushes the price below the 99.33 support and the 200 MA, then the risk of a trend change to bearish will grow and needs to be anticipated by market participants when formulating their next trading strategies.