FX.co ★ Technical analysis of USDX for October 7, 2016

With the British pound collapsing overnight and a widespread Dollar strength, price has broken above important support levels and previous short-term highs. Is this a real breakout or a fake one as a result of a thin overnight market? With the announcement of the NFP today, a very interesting trading day is promised.

Blue lines - bullish channel

The Dollar index remains in its bullish upward sloping channel. Price is now testing the upper channel boundaries. Trend remains bullish. Support is at 96.25 and if broken we could see a decline towards 95.75. Below 95.50 we will have a confirmation of a fake breakout and a very important bearish reversal signal.

On a weekly basis we finally see the weekly candle break above the weekly cloud resistance. This is an important bullish signal for the longer-term trend of the Dollar index. A rejection today could only be caused by the NFP numbers announced later in the day. A rejection here will be a very bearish signal. Important support levels are now at this week's lows and at 95.20. Next important resistance is at 97.60 the July high. A break above it will increase the chances of a new bull trend starting targeting new highs above 102-103.