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The US Dollar Index is unwinding from overbought levels, as highlighted to clients on 03 January. Below is the daily as well as the weekly charts.
Daily Chart
Weekly Chart
Previous Post (Friday 03 January): U.S. DOLLAR INDEX Short Term Overbought
Overall Trend:
7-Day Trend: Strong
14-Day Trend: Very Bullish
Short-Term Price Action Reading (1 to 10 Trading Days):
Do Not Enter Long Here: The risk-reward is considered unattractive at this point.
Medium-Term Price Action Reading (2 to 4 Weeks):
Aggressive Buying but Overbought: The index is showing aggressive buying, but it is also overbought.
Expect Consolidation or Minor Retracement: Due to the overbought condition, a period of consolidation or a minor retracement is anticipated.
Long-Term Price Action Reading (5 to 8 Weeks):
Aggressive Buying, But Do Not Chase: The trend remains bullish, but it's advised not to chase the price.
Look for Overshoot or Failure to Hold Prior Session Range Highs to Short-Sell Back to the 8-EMA: To identify potential short-selling opportunities, traders should look for instances where the price overshoots or fails to hold the previous session's range highs.
Key Takeaways:
The U.S. Dollar Index is currently in a strong bullish trend, both in the short and medium term.
However, the overbought condition suggests a potential consolidation or minor retracement in the near future.
Traders are advised to exercise caution and avoid chasing the price at this time.
Short-selling opportunities may arise if the price overshoots or fails to hold previous session highs.
Lester Davids
Analyst: Unum Capital
Note Added on 03 January 2025 at 12h20
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