The dollar index finally broke out of the wedge it’s been forming for days. It went on extending to the point you would expect the dollar to collapse, but for the euro’s critical level of 1.396 that I also showed could be a key trend reversal level. Finally, we have a breakout that could mean the start of the dollar rally for months ahead unless something changes. The dollar index, I first marked as a leading diagonal in 2012, but for 2 years it’s been in a trading range raising doubts about the overall trend. For the 4th time, it has taken a support on the rising neckline support near 79 keeping hope that the bullish marking is correct and a move down to 75 is ruled out till this neckline does not break. We intiated buy call at 79.27 with targets at 80.12, 80.4, and 80.75.
In the hourly chart, RSI favors sell side and weakness persists only below 80.05. On the downside, support exists at 79.81, 79.7, and 79.5.
The price is facing strong resistance at 80.40, until trades are above this level, hold short positions for targets at 79.93. On the upside, if the price trades above the level of 80.40, we will see 80.6 and 80.75 immediately.
Sell with sl 80.40 (closing basis) and targets at 80.05, 79.93, 79.7, and 79.5, cmp 80.19.