The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
US Dollar Index forming potential head and shoulders
Yesterday saw the Dollar Index fail to break back above last week’s $98.00 peak, with the price instead topping off around $97.50. With the price having seen substantial gains and reaching a key long-term trendline resistance, the fact that we are now seeing this kind of failure to regain the price back above this trendline is a bit of a warning.
Given the lower high, we have a potential right shoulder in a possible head and shoulders pattern. Thus there is a possibility that this could be a top, where the neckline is around $96.74. This also represents the approximate September resistance. As a result, I am less bullish given the failure rally yesterday and instead either await a close below $96.74 for bearish connotations (support at $96.52 and $96.15) or else a bullish reversal sign between $96.89 and $96.74 (subsequent resistance at $97.40).