The US$ remains range-bound within a daily chart symmetrical triangle and embedded within both the 4hr and daily Ichimoku Clouds. This should be some sort of warning to traders of both the index and of many FX pairs.
NB: I am still trying to sort out lap top issues and so updates will be brief and few this week.
USDX daily: The daily chart shows that this recent triangle pattern has been evolving over the last few months and, generally speaking, the longer the range-bound activity continues then the greater the movement when a breakout does eventually trigger. Note how price action is edging towards the apex of this triangle so keep an eye on the trend lines for any breakout and on the momentum indicator too:
USDX weekly: the weekly chart shows this index has been range bound for an even longer period. It has been stuck between 92.50 and 100 for the last 20+ months and I’m watching for a breakout from this channel as well:
Ichimoku Cloud: The US$ index is stuck within the Ichimoku Cloud on both the 4hr and daily chart time frames which is simply another way of saying that the index is range-bound within a zone of congestion. It is worth remembering, though, that the index is below the weekly Cloud which is bearish:
USDX 4hr Cloud: stuck in the 4hr Cloud:
USDX daily Cloud: still in the daily Cloud:
USDX weekly: however the index is below the weekly Cloud which is bearish. Note the lack of momentum here:
Summary: my experience has been that when the US$ index is range bound and stuck in the 4hr and or daily Ichimoku Cloud that FX action is choppy on the USD based FX pairs; not always but more often than not. Thus, watch the US$ index to see which way it eventually breaks, up or down, to help determine future trade direction across the US$ based FX pairs. The EUR/USD is one such pair. Check out the daily chart below and you can see that it, too, is range-bound within a daily chart triangle and with little momentum. Thus, watch for any trend line breakout that evolves with increased ADX activity: