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Currency Market: US Dollar Index Has Rallied Into Resistance Range


Current strength in the US Dollar Index should be sold, and failure below 79 would target 75.

The US Dollar Index has rallied above the 80 resistance level I mentioned last week, and I think this resistance range here between 80 and 81 should provide formidable resistance. The DX almost touched 81 Friday morning, which also happens to be the 200-day moving average. This allows us to enter short positions in the US Dollar Index with a very tight stop just above the market at 81. A failure back below the 79 level would confirm the head and shoulders topping pattern and project a downward move back down to the 75 level. So at current levels, we have a very nice risk reward short opportunity in the US Dollar Index of greater than 1 to 5. Keep an eye on the 81 level to manage risk in this trade.

Click to enlarge

Good luck out there and happy New Year!
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