The U.S. Dollar Index ($USD) remains in a long-term downtrend, but the index is showing signs of strength with a consolidation breakout this week. After becoming oversold in March, the index firmed for 6-7 weeks and surged above its mid March highs this week. StochRSI moved below .20 in late February, firmed a few weeks and then broke above its mid point (.50). These breakouts opens the door to an oversold bounce that could extend to the 75-78 area.
There are a number of factors pointing to resistance around 75-78. First, the trendline extending down from January-February 2007 comes in around 78. Second, the December 2007 high marks resistance around 78. Third, the falling 40-week moving average marks resistance just above 76. And finally, the January-February consolidation can also act as resistance around 76. Taken together, I am marking a resistance zone around 75-78 for the upside target.
