USDIDX: Forex Technical Analysis – Improving data support US Dollar Index

By IFCMarkets

Improving data support USDIDX

Improving US economic data support US dollar. Will the USDIDX continue advancing?

Recent positive data indicate US economic performance is improving. Auto sales jumped in September reversing recent downward trend on the back of strong demand to replace hurricane damaged vehicles. The ISM manufacturing index rose from 58.8 in August to 60.8 in September, the highest reading since 2004. ISM reported Wednesday nonmanufacturing index in September hit a 12-year high of 59.8. Readings above 50 indicate expansion. Today September jobs report is due at 14:30 CET. ADP reported Wednesday that 135000 private sector jobs were created in September. The number was lower than 228000 reading in the previous month, as was widely expected due to a negative impact from hurricanes.

USDIDX

On the daily timeframe the USDIDX: D1 has been rising after hitting 46-month low in the beginning of September.


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  • The Parabolic indicator gives a buy signal.
  • The Donchian channel indicates uptrend: it is tilting upward.
  • The MACD indicator gives a bullish signal: it is above the signal line and the gap is widening.
  • The Stochastic oscillator is falling but has not reached oversold zone yet.

We expect the bullish momentum will continue after the price breaches above the upper Donchian bound at 94.107. A price above this level can be used as an entry point for a pending order to buy. The stop loss can be placed below the fractal low at 92.943. After placing the pending order, the stop loss is to be moved to the next fractal low, following Parabolic signals. By doing so, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (92.943) without reaching the order, we recommend canceling the position: the market sustains internal changes which were not taken into account.

Technical Analysis Summary

PositionBuy
Buy stopAbove 94.117
Stop lossBelow 92.943

Market Analysis provided by IFCMarkets