Technical Analysis – US Dollar Index rebounds on ascending line; gains are expected

Melina Deltas, XM Investment Research Desk

The US dollar index found a strong support obstacle on the long-term ascending trend line once again, sending the price higher. The short-term bias is tilted to the upside as the stochastic oscillator is approaching the overbought area with stronger momentum than before in the daily timeframe.

If the index moves higher, the 50-day simple moving average (SMA) currently at 97.25 and the 97.40 resistance level could attract traders’ attention before the price hit the two-year high of 98.25. Any violation above this hurdle could open the way for the 98.70 resistance, posting a higher high in the long term.

On the other hand, if the price posts a bearish retracement the next support could come from 96.40 and the 200-day SMA near 96.27. More losses could shift the long-term bullish outlook to bearish, meeting the 23.6% Fibonacci retracement level of the upward wave from 88.10 to 98.25 around 95.84.

In the bigger picture, the dollar index has held in an upside tendency, however, looking at the very short-term, the price is returning higher towards the 50-day SMA.