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US Dollar Index Technical Analysis - US Dollar Index Trading: 2018-03-16
Weak data bearish for USDIDX
Slowing wholesale inflation and lower retail sales weigh on US dollar. Will the USDIDX continue declining?
Recent economic data suggest the US economy is not overheating. The producer price index, which reflects wholesale inflation, increased 0.2% over month in February, down from the 0.4% advance in January. At the same time US retail sales fell 0.1% in February, the third straight monthly decline. Tepid wholesale inflation and falling retail sales are bearish for the dollar index. And while import prices rose more than expected – import prices index gained 0.4% in February when an 0.2% increase was expected, their rise slowed compared with 0.8% advance in January.
On the daily timeframe the USDIDX: D1 has been rising after hitting 39-month low a month ago.
- The Parabolic indicator gives a sell signal.
- The Donchian channel indicates no trend yet: it is flat.
- The MACD indicator gives a bullish signal: it is below the signal line and the gap is narrowing.
- The Stochastic oscillator is rising but has not breached into the overbought zone.
We expect the bearish momentum will resume after the price breaches below the lower Donchian bound at 89.382. A price below that level can be used as an entry point for a pending order to sell. The stop loss can be placed above the upper Donchian bound at 90.37. After placing the pending order, the stop loss is to be moved to the next fractal high, 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 (90.37) without reaching the order, we recommend canceling the position: the market sustains internal changes which were not taken into account.
Technical Analysis Summary
| Position | Sell |
| Sell stop | Below 89.382 |
| Stop loss | Above 90.37 |
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