From this point, the US dollar can both continue to grow in the long-term channel and begin a downward trend.
Now the dollar index has stopped at the upper edge of the medium-term declining channel (blue channel) in the immediate vicinity of the reversal resistance level at 97.350. The breakdown of this resistance up will lead to the exit from the declining channel and opens the way up for the bulls, up to a new index maximum at 99.200.
A decrease below 96.700 will allow the bears to develop the offensive and test the latest support at 95.930 and further, a strong long-term support zone around the round value of 95.00.
Let’s see how the battle between bulls and bears occurs on a larger timeframe. On the USDX hourly chart, we can clearly see how the dollar index returned to the long-term channel and, having tested its lower border, continued to grow.
However, the bulls failed with four attempts to take the resistance level of 97.150 (pink level) and the price went below support 96.670 (light green support line). And here we see the classic bear trap (highlighted by the circle number 1 on the chart).
The price returns above support and breaks the resistance at 97.150 on stops and forms a new maximum at 97.300.
And then the bears seize the initiative and take off their feet with the help of a bull trap, returning the price below the level of 97.150 (inside the purple circle No. 2).
It is in the immediate vicinity of this level that the US dollar index is being traded at the time of writing this review.
The nearest price movements can tell us the direction of further movement of the US dollar in the near future.
It remains to closely monitor the resistance at 97.300, support 96.700 and wait for a clear signal from your trading system.
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Roz has been engaged in the financial markets since 2017, specializing in Foreign Exchange, Before joining to FOREX IN WORLD she start to learn forex trading related information.