Today, at the end of the first week of the month, the dollar remains positive, while its DXY index remains above 107.00. The breakout of today's local high at 107.60 will be a signal to increase long positions in DXY futures with the prospect of growth towards multi-year highs of 121.29 and 129.05, reached, respectively, in June 2001 and November 1985.
The price (in the MT4 trading terminal, the dollar index is reflected as CFD #USDX) has broken through the upper limit of the rising channel on the daily and weekly charts (mark 106.38), while the technical indicators OsMA and Stochastic are on the side of the buyers. On the monthly CFD #USDX chart, the Stochastic has been in the overbought zone since August last year, not wanting to get out of there, which also indicates strong bullish momentum.
Thus, from a technical point of view, everything also speaks so far in favor of long positions on the dollar and its index.
In an alternative scenario, the signal for the beginning of a downward correction of the dollar and the DXY dollar index and the opening of short positions will be a breakdown of the support level of 105.83 (200 EMA on the 1-hour chart).
In this case, CFD #USDX will go deep into the ascending channels on the daily and weekly charts, towards the support level of 103.75 (50 EMA on the daily chart) and the local support level of 103.00 (March 2020 highs). However, for such a scenario and possibly a deeper decline, strong fundamental factors are needed. And so far, there are none. Markets expect the Fed's rate hike cycle to continue and the dollar to rise further.
The break of the local resistance levels 107.76, 108.00 will open the road for CFD #USDX towards multi-year highs of 121.00, reached in the summer of 2001.
Support levels: 107.00, 106.38, 106.00, 105.83, 105.76, 104.27, 103.75, 103.00, 102.00, 101.30, 100.60, 100.00, 99.40, 98.67, 95.70
Resistance levels: 107.76, 108.00
Trading Tips
Dollar Index CFD #USDX: Sell Stop 106.30. Stop Loss 107.77. Take-Profit 106.00, 105.83, 105.76, 104.27, 103.75, 103.00, 102.00, 101.30, 100.60, 100.00
Buy Stop 107.77. Stop-Loss 106.30. Take-Profit 108.00, 109.00, 110.00, 111.00