Dollar Index Rides the Trendlines Higher Feb 25

Feb 25, 2010: 1:58 PM CST

In an interesting development, the US Dollar Index (shown here in the @DX futures contract) has been riding a clearly defined trend channel higher, with a few bumps along the road.

Let’s take a quick look at the current structure and note the most important price levels to watch going forward – in the event of any sudden price breaks.


(Click for full-size image at Chart.ly)

I’ve stripped away all the indicators – save for my favorite 3/10 Oscillator which frequently calls out divergences that you might miss otherwise – and focused purely on price on the 120min frame.

Starting from the January lows, we see the long-term lower (rising) trendline ends at the $81.00 index level – which is where we are now.

A second long-term trendline connects the prior price highs, which began also in early January.  It resides now near the $82.00 index level.

In general, trendlines act as ‘boundaries’ for price to bounce or move between them on a steady journey higher (or lower).

For reference, a second, smaller trendline formed to connect the prior three price ‘spike’ lows, and it now rests at the $80.50 level… which would be the likely target if price (index) broke under the $81.00 trendline level.

We’re seeing a slight negative divergence here on the dollar (on the prior two immediate swings) so watch for that to lead to a possible short-term downward move if the forecast is correct.

Otherwise, keep watching the chart and these key levels going forward.

Bonus Chart:

I wanted to add this pure price look at trendlines using the Andrews Pitchfork trendline tool:

Starting at the early December 2009 lows and then drawing to the December high and then down to connect the midpoint of the Pitchfork tool to the January lows, we see the following grid.

It shows similar trendlines – though cleaner and more professionally – than those I drew by hand above.

For in-depth analysis on the US Dollar Index (and Stocks, Bonds, Gold, and Oil), become a member of our Weekly Inter-market Reports.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

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One Response to “Dollar Index Rides the Trendlines Higher Feb 25”

  1. SP500 Gann and Andrews Picthfork Updated Chart Art | Afraid to Trade.com Blog Says:

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