FX.co ★ #USDX technical analysis for January 22, 2015

The Dollar index remains inside its upward sloping channel. Trend continues to be bullish in the longer-term, but the short-term action is very choppy with increased volatility and many price spikes at both directions.

Black lines = wedge formation

The Dollar index is forming a wedge pattern near its highs. The overlapping price structure has led me to this conclusion as it defines very clearly the uncertainty and the increase of volatility of the recent days. Price has broken the short-term support yesterday and reached our short-term downside target only to pull back up. This wedge is a bearish one, and I believe that short-term traders should go short once the lower boundary at 92.25 and the recent low at 92.20 are broken.

Black lines = price channel

The Dollar index remains inside the upward sloping channel. Tenkan-sen support is at 92.38. Kijun-sen support is at 90.50. A daily close below the tenkan-sen will eventually bring the index towards the kijun-sen. Bulls should be very cautious as a break below 92 could lead to a deeper correction towards 90 or lower.