21.03.201413:01 Forex Analysis & Reviews: #USDX Technical analysis for March 21, 2014

Soon, we will know if the breakout of the Dollar index above 80 towards 80.50 was real or a false breakout. The Dollar index is pulling back down towards its break out area and this backtest is very important. Previous resistance area at 80-79.95 is now support. If this support holds, we should expect another upward move in the Dollar index that will challenge the resistance at 81 and 81.40.

Short-term trend is up. Prices have broken above the Ichimoku cloud and out of the falling wedge. We could see a pull back towards the 79.95 area or even towards 79.65. However at this stage I expect corrections to be shallow if the index is to move higher.

On a daily basis the Dollar index has important resistance at 80.70 and important support at 79.95. Short-term trend has changed to up, but longer-term trend is still down. We are mildly bullish as long as price trades above 79.40. Breaking above 81 will be very bullish for the Dollar index and this is where we look to add to longs.