The most recent chart about the U.S. dollar index released this week showed that the index has been trading in an extensive trading group between 79 and 83.5. The activity for the index revolved around the support and resistance of about 81.5, during this whole time.
The escaping higher than 83.5 botched and the trading band has distinct the movement of the dollar index from March 2012. The index between the periods of May 2012 to September 2012 managed to stay in the upper section, which depicted a sustained bullish force during this time.
After the phase of bullish trading, the dollar index then made entry into the bearish zone trading underneath the central resistance and support level; this was from the period of September 2012 to February 2013. After February 2013, till June 2013 the index stayed within the bullish upper half of the trading band. The fall beneath the 81.5 mark showed a bounce back to the bearish phase of the alternation around the central resistance and support point.
This week, the dollar index traded above the 81.5 level. But it did not make above the downtrend line on the weekly chart for the index. It thus seems likely that the dollar index will slip into the lower section of the trading band.
The weekly chart even suggested that the long-term bullish bias for the index is here to stay. Currently the up sloping trend line is trading near to the 79.5 mark and the support resistance around the 81.5 level.
It’s being speculated that is the U.S. dollar index continues to trade below the downtrend line than a period of consolidation that will cause the same to oscillate between 79.5 and the support resistance level around 81.5 may soon occur.
Meanwhile, if the index moves above the value of trend line and also crosses the value of the support resistance level around 81.5 then the increase is partial as there is well-built resistance near 83.5. The probability that the dollar index may breakout above the resistance near 83.5 mark remains very low and almost ruled out. Also, the index moving beneath the 79 mark seems fading away. As per the real thing, it’s only the time that will tell it all.