Technical Analysis

Dollar index trades back higher after sniffing the 200 day MA yesterday and stalling

Below the day MA

The dollar has moved higher today after a wander lower over the last month or so.

Looking at the dollar index daily chart above, the high in December stalled near the November high. That helped to turn the bias lower (see green circle 3). 

The early January low did get below the 100 day MA but stalled at the November low and corrected higher.  That rise stalled, and prior to today, the last 6 days has seen a move lower. That move took the price below the 100 day MA (at 96.00 currently – blue line) and the November/early Jan low at 95.678 (bearish).

What could not be breached on the downside, however, was the 200 day MA (green line at 94.884). The low yesterday could only reach 95.029. If the dollar is to weaken in 2019, That would be one of the minimum targets to get through (the 100 day MA is the first target), and stay below for the technical picture to weaken.  The price has not traded below the 200 day MA since back at the end of April/beginning of May 2018. 

So what’s next?

The price currently trades between the 100 day MA above at 96.00 and the 200 day below at 94.884.  In between is the November/early Jan. low at 95.678. The price is currently trading around that level.  When the price trades between these two key daily moving averages, I call it trading between the Goal Posts. “The market” is a little bearish (below the 100 day MA). It is a little bullish (holding above the 200 day MA).   Traders are unsure.

At some point, a bias decision will be made. If it is a strong trend move, we will see a break and significant run.  The 2018 move higher took the price from 88.25 to 97.71 (or near 10 points higher)

If it is moderately bearish, a break lower will target the 38.2% and then the September lows at 94.098 and 93.814 respectively.  A further move will target 92.982 at the 50% retracement..

A move higher, looks toward the January high at 96.958 and the ceiling high from November and December at 97.711. A move above that and traders will be thinking about 100.00.

Right now, the “market” is feeling out what the next move might indeed be in the near term (and perhaps for the trend of 2019 too). 

ForexLive

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