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Currency Market: US Dollar Index Has Rallied Into Resistance Range

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

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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.


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Good luck out there and happy New Year!
No positions in stocks mentioned.
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