USDollar Index Breaks Trendline Signal Downtrend

Source: Meta4trading platform                                                 Daily chart

Market Sentiment:                                                                     Actionable Points

Long term – Bullish                                                                        Resistance: 95.22 -96.74
Mid-term – Neutral                                                                        Support: 93.14
Short term - Short

The past week saw traders going short on the Dollar index declined by 1.03% to close at 94.87 after having opened the week 5/10/2015 at 95.86. This is its worst week in four months with more critical break and move lowers obvious for an asset that has generally climbed for four years. Over the past months, the continued rally seen in the Dollar was as a result of expectation of rate hike from the Fed and since this is not being expected anytime soon the risk of a decline in the dollar is projected. Fundamental figures from the US lately have fallen beyond market expectation which has not help in boosting the need for immediate rate hike therefore capped the currency’s climb.

The Greenback in the coming week could see more skepticism from investors and traders with more downward moves expected.

The daily chart above shows a downward break in the intermediate demand trendline on 9/10/2015 after having traded in an upward symmetric triangle.  The price trend has also shown the greenback hovering below 100 SMA and 20 EMA while MACD histogram triggered sell bias by breaching below the watermark.  The downward momentum in the coming week is expected to continue towards support level 93.14. On the other hand, a retracement back above the breached support trendline would place the greenback into a consolidated zone.

Trading Advice:

With short term bias down, Day traders and swing traders with short term timeframe perspective may ride from the short term downward rally with support level 93.14 critically watched and stop placed at above the breached support tendline at 95.22.