USDIndex: Bounce From Lower Support Line Approaching Upper line of Bullish Channel As Uptrend Resumes
The daily candle chart below shows the medium term price history for the USDIndex - which is a contract for difference (CFD) that aims to track the underlying US Dollar index (DXY). Today the index is trading near 98.60 around time of publication, and ahead of the upcoming holiday that will see most markets closed in the US and other regions.
The USDIndex is returning towards the upper line of the bullish channel (green parallel ascending lines on chart below), and higher for the fourth day - after finding support on the lower line of that channel and as explained in the last related post in Ideas You Can Trade last week. If the resistance near today's high near 98.99 isn't overcome - then a bearish reversal should follow, whereas a break above that level and the upper line of the bullish channel should help sustain the USDIndex towards reaching 100.00 again.
In the last above-mentioned post the USDIndex was described as potentially pivoting on the lower support line of the bullish channel (and subsequently did), and thus could already be well underway to continuing towards its March 13th high just under 101.00. However, the upper resistance line of the bullish channel still remains the next upside barrier before 100.00 is revisited.
*While the US markets will be closed on Friday, including trading in the USDIndex, other markets such as the Forex market will operate normally, and as per WorldWideMarkets.com trading hours on the following link:http://www.worldwidemarkets.com/wwm/holidayhours.aspx
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 99.09 with a Limit to take profit @ 99.99 and a stop-loss @ 98.39 Risk/Reward Summary: Limit risk = +90 points profit / (-60) Stop-loss risk = Gain to Loss Ratio = 1.50
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 97.55 with a Limit to take profit @ 96.99 and a stop-loss @ 98.01 Risk/Reward Summary: Limit risk = +56 points profit /(-46) Stop-loss risk = Gain to Loss Ratio = 1.21
Medium Term Daily Candle Chart: