Monthly:The September candle is printing a bullish coloured Doji

Monthly: The September candle is printing a bullish colored Doji candle. The monthly chart also still shows a Bull Flag forming and, if it evolves, the target would be the 120 region. This has been calculated as follows: the height of the Flag pole of the Bull Flag is about 20 units (100 – 80 = 20). Extrapolating up 20 from the top of the Bull Flag, as per Bull Flag breakout technical theory, puts price up in the vicinity of the 120 area. This happens to be a key region for two reasons: Firstly, this is the 50% fib of the 1985-2008 major swing low move and, secondly, this is a previous S/R region with price action reacting here for over a two year period from mid-2000 to mid-2002. Thus, any break and hold back above 100 might be expected to target this region.

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USDX: The US$ closed higher last week thanks to Friday’s upbeat US CPI data which seems to have renewed thoughts of a potential rate hike at next week’s FOMC meeting. Price action broke up through 95.50 resistance and out from a triangle pattern that had constrained price action for the last 3 months.

Despite these continued gyrations around the 95.50 level, I still consider the US$ to be in no-man’s land though whilst it trades above 92.50 but below 100. I am waiting for a decisive breakout from this region to signal the next major directional move on the index as this choppy and range-bound price action has gone on for over 18 months. The levels to keep watching on the USDX are:

The 95.50 level.
The psychological 100 level above current price. This is the top of the longer-term trading range.
The 92.50 level below current price. This is the bottom of the longer-term trading range.