By studying the daily chart of the dollar index, we could see how it was dominated by the main bearish channel appearing on the following daily chart:

This channel carried the index from the recorded top of 6^th of June 2010 at 88.70 until the recorded low of yesterday at 75.62, and from this low level, the index jumped to escape being in the dark levels that could add more negative pressure on it.

In general, there’s nothing to save the index from resuming the bearish trend, and if we could witness some bullish actions in the coming period it would be a normal trading within the current bearish channel, so we can imagine a max. target of 79.60-79.50 that represent the resistance level of the mentioned channel and then will be followed by the main bearish trend resumption.

Momentum indicators provide the index with positive signs that could help it to go up for the waited resistance level, while we can expect this positive momentum could be lost by then.

The gate for the dark level mentioned in the beginning of this report and also highlighted with the grey circle in the above image is 76.10, and we can see the weekly close that was achieved yesterday came up above this level, in which we believe will postpone the downside trend until we witness a touch for 79.50 levels.

Why this level is critical and we call it the “ Dark Levels Gate “ ? check out the below image:

Going back in time and more specific in 22^nd of September 2010, the index has breached the neck line level of a Double Top patter –colored with red-, this pattern tells us that there’re more bearishness expected to be witnessed on the index, and while full targets could reach down to 72.00 levels, yesterday’s low represents 50% of this target, so we can be waiting for more lower targets to be reached.

If this bearish pattern really pushed the index lower with a help coming from the bearish channel, this the breach of the “ Dark Levels Gate “ will be easy to be done, and in this case we can sit back and watch the index going down mainly to 72.00, and who knows, maybe the 70.00 level could be attacked too.

As a conclusion for all above, we can say that the major trend for the US Dollar Index is bearish on the short term and med term, and more confirmations will come from breaching the 76.10 level with a weekly close below.

But on the other hand, the savior from this big bearish trend will come from surpassing the main resistance levels that located between 79.60 and 80.10, and in this case, we can re-consider the possibilities of starting upside correction that could go up to 83.65, which will be the opposite gate in which will lead to the “ Shining Levels Gate “.

By: Yasir Mubarak

Senior Technical Analyst

Risk Manager




Georgia Anderson` Financial News Network, trader, trader education, online forex, daytrader,forex currency, forex software, investors, forex trading, forex.

Written by :

Yasir Mubarak