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US Dollar Index Analysis 18 Jan 2010

Dollar Index Chart (Weekly) 18 Jan 2010

The weekly chart for the US dollar index remains inherently feeble with last week’s candle closing as a very narrow spread upbar with a small wick to the lower part of the body.  In itself this provides us with little in the way of longer term direction and simply reinforces the previous three weeks which have also closed as narrow spread candles, all sandwiched between the 9 and 40 week moving averages.  All of this came after a strong dollar rally in December which promised much but which has, so far, failed to deliver.  The key for a longer term recovery in the US dollar will be a break and hold above the 80 price point coupled with a breach of the 40 week moving average and should these technical factors combine then this could provide the platform necessary for a sustained move higher for the US dollar.   However, with strong potential resistance above any move higher will only achieved with significant force and momentum in order to drive through this congested price zone.  The only positive that can be taken from the current weekly chart is that last week’s closing candle still remains above both the 9 and 14 week moving averages.

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Support & Resistance for USD Index (Weekly Chart)

S1:  76.78    R1:  77.58

S2:  76.29    R2:  77.89

S3:  75.95    R3:  78.38