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 around 95.08 around time of publication.
After exiting the lower support line of the bullish channel as described in the last post in Ideas You Can Trade, the USDIndex briefly attempted to regain that channel but failed to even reach 99.00 on April 21st.
Since then, the bearish momentum that has fueled the retracement of the index towards current prices brought it under 95.00 where today's intraday low of 94.45 was the latest lower-low as the pullback deepens.
There are a number of converging support lines just below current prices (see chart below), around the area between 93.00 and 94.00. In the last post the USDIndex was described as being in a steep-dive and that appears to still be the case, so unless support holds on 95.00 or a brief bounce from this level follows - a lower-low closer towards 94.00 and subsequently 93.00-92.00 may be tested before a larger recovery resumes.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 95.52 with a Limit to take profit @ 95.92 and a stop-loss @ 95.12 Risk/Reward Summary: Limit risk = +40 points profit / (-40) Stop-loss risk = Gain to Loss Ratio = 1.00
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 94.44 with a Limit to take profit @ 93.78 and a stop-loss @ 94.98 Risk/Reward Summary: Limit risk = +66 points profit /(-54) Stop-loss risk = Gain to Loss Ratio = 1.22
Medium Term Daily Candle Chart: