Our outlook at the beginning of the week was for the USD Index to range between 80.80 and 81.50 and so far this is what we have seen. However, the longer the 81.50 resistance holds, the more I will wonder if the run from 79.00 lows may just be corrective after all...
I am still of two minds as to where we will go from here. On the one hand, the bullish run from 79.00 does have an impulsive undertone about it, but on the other 81.50-65 does have a solid confluence of resistance which will take some effort to overcome.
Additionally, we have had 3 daily highs test—but fail—to penetrate this area, with the 3rd attempt producing a Shooting Star Candle with a subsequent bearish bar which sold off, back to the 80.80 level.
So the plan from here remains simple:
- A break below 80.80 assumes a resumption of the dominant downtrend, and more clear moves on the FX Majors
- A break above 81.50-65 undermines the bearish structure, and we can expect clearer trends on FX majors
- Continued ranging between 80.80-81.50 makes FX majors more suited to intraday trading/swing trades
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