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CFD: Ideas You Can Trade- USDIndex Back Under Long Term Resistance

Posted by Steven Hatzakis on Oct 17, 2014 3:10:00 AM

USDIndex: Pullback Falls Under Multi-Year Resistance 

The daily candle chart below shows the medium term price history the USDIndex contract for difference (CFD) which is trading around 85.10 around time of publication today.

This CFD aims to track the underlying US Dollar index (DXY), and has just pulled back in recent days from above a multi-year bullish resistance line (point 1 on chart below in red).

Last time this CFD was covered in the Ideas You Can Trade series that resistance line was approaching and since then a breakout to the upside followed with a peak near 86.85 on October 3rd. Since that high the USDIndex appears to have reversed and failed to hold on the median support line of the short term bullish channel (point 2 in aqua color on chart below).  

Unless the median line of that channel is regained, and the multi-year resistance line retested, the USDIndex may continue to look for support below current levels. If the medium term uptrend resumes, as the overall trend is bullish, then the October high may be revisited, although the very short term momentum still looks bearish.

Below are examples of how to trade a bullish continuation or a bearish reversal:

1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 85.44 with a Limit to take profit @ 85.88 and a stop-loss @ 85.16  Risk/Reward Summary: Limit risk = +44 points profit / (-28) Stop-loss risk = Gain to Loss ratio = 1.57

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 84.83  with a Limit to take profit @ 84.50 and a stop-loss @ 85.16 Risk/Reward Summary: Limit risk = +33 points profit /(-33) Stop-loss risk = Gain to Loss Ratio = 1.00

Daily Candle Chart:

describe the image

Weekly Candle Chart:

USDIndexWeekly October 17 2014 note longer term

 

Topics: forex trading, US Dollar, DXY, United States Dollar, US, USDIndex, USD Index, DXC, technical analysis, USD, $, USDX

 

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