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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

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DXY US Dollar Index
Daily change
95.9594
Low: 95.7193
High: 96.1494