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US USD Index Price analysis: ending wedge offers a long opportunity

By Alpha Analysis

US USD Index Price analysis: the ending wedge offers an upward bias. With bullish outside candles posted, a base may be in place

US USD Index Price analysis

Market highlights from the past week

Tuesday July 14: a lack of defensive demand and weak fundamentals undermined the dollar with one-month lows.

Wednesday July 15: industrial production increased 5.4 per cent for June after a 1.4 per cent gain previously and above consensus forecasts of 4.5 per cent with manufacturing posting a 7.2 per cent advance

Thursday July 16: US retail sales data was stronger than expected with a solid overall data trend

Friday July 17: US housing stats increased to an annual rate of 1.19 million for June from 1.01 million the previous month and slightly above consensus forecasts

Monday July 20: firm risk conditions limited underlying US dollar demand with the US currency dipping to four-month lows before a marginal correction

US USD Index Price analysis

Let us have a look at the technical viewpoint: 

Monthly: although we have posted three months of net losses, all trading is confined to the large March range (102.99-94.65). Inside Soldiers

Weekly: the trend of higher lows from February 2018 (88.25) to March 2020 (94.65) is located at 95.78, just under current price. 

Daily: a triangle breakout measured move target is located at 95.60. We have seen at 95.62 low. A Bullish Ending Wedge has formed. A break of 96.24 and the measured move target is 97.81

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Intraday four-hour: posted bullish Outside Candles on the four-hour chart. Often indicates the base of a trend and the start of a new upward bias. 

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Outlook: The ending wedge offers an upward bias. With bullish outside candles posted, a base may be in place 

Possible trade set-up: 

Action: Buy at the market (95.75)

Stop: 95.50 (below the base of the wedge)

Target: 97.80 (wedge target) 

Potential return on risk to first target:  R8.2 (reward 205/risk 25)

Risk Warning - Your capital is at risk - Losses can exceed deposits

Trading spot foreign exchange and futures on margin carries a high level of risk and may not be suitable for all investors. You may lose all your capital. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in spot foreign exchange or futures you should carefully consider your investment objectives, level of experience, and risk appetite. If you are in any doubt about investment or the mechanics of such products, you should seek independent financial advice

DXY US Dollar Index
Daily change
Low: 95.7193
High: 96.1494