USD Testing Major Trend Resistance into Q4

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The US Dollar is testing major uptrend resistance and the approach in both price & time leaves the immediate breakout vulnerable into the open of Q4. These are the updated targets and invalidation levels that matter on the DXY weekly price chart.

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US Dollar Index Price Chart – DXY Weekly

Chart Prepared by Michael Boutros, Technical Strategist; DXY on Tradingview

Notes: In my last US Dollar Index Price Outlook we noted that USD had, “failed yet another attempt at a breach above long-term uptrend resistance and remains at risk for a larger pullback while below this slope.” Price pulled back to register a low at 97.86 in the following week before mounting the next counteroffensive with the index rally to fresh yearly highs into the open of October trade.

Despite this advance- its it critical to note that the Dollar has been unable to mark a weekly close above the long-term resistance slope we’ve been tracking for years now and the burden is on a bulls to validate a larger breakout here. That said, we continue to hold that the immediate advance remains vulnerable here until we get the weekly close above this key threshold.

Look for stabilization above 99.43 to offer guidance with a breach higher targeting the 2017 uncovered close at 99.98 backed by the 78.6% retracement of the 2017 decline at 100.49. Weakness beyond 98.93 would have me looking for a deeper correction in the index – we’ll note critical uptrend support at 97.87. Keep an eye on the multi-year resistance trigger we’ve been tracking in weekly RSI into the close on Friday.

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Bottom line:The US Dollar Index is attempting to breach multi-year uptrend resistance into the monthly / quarterly open – watch the weekly close. From at trading standpoint, a good spot to reduce long-exposure / raise protective stops. Be on the lookout for possible topside exhaustion into this slope extending off the 2018 high with a weekly close above needed to fuel the next leg higher in price. US Non-Farm Payrolls on tap this Friday.

Previous Weekly Technical Charts

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— Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

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