Watch this key pattern on the Dollar

The U.S. Dollar (Cash Index) has been testing the psychological level of 86.00 steadily since September 8th. The battle is still raging on at the 86.00 to 86.22 level almost one month later.

There were three highs from the last attempts at 86.00 with the highest being the 86.22 — just two pips above the “20” pip minor psychological number. The 86.00 level is certainly not impenetrable but it’s clear that currently 86.00 has not been established as support. Let’s examine another aspect however because simply getting above 86.00 is not the only measure of whether the Dollar can move higher.

The Wave is traveling upward between 12 and 2 o’clock and while it’s certainly closer to 2 o’clock, the Wave is support and as long as prices stay above this Wave I will assume support. The opposite would be the case if prices break below all three lines of the Wave. Note the drop on the October 2nd from the 86.13 high. Once prices pierced the Wave, support was gone and the Dollar traded lower.

While the Dollar tests the downtrend line just above 86.00 this morning, the Euro is trading within a range on the 240 minute timeframe as the ECB comments are digested.

The 30 and 60 minute charts of the USD/JPY are slow transitioning from their respective downtrends however the 180 minutes charts are consolidating just below the 118.00 psychological level.

This charts show a pierce through the 117.50 support level with MACD Histogram confirmation.

The Philly Fed is speaking so keep an eye on the 86.00 level as well as Wave support at 85.90 in the Dollar Index.

*All charts are done on eSignal Premium with the EZ2 Trade Software Colelction.

Raghee Horner is an trader with more than 15 years’ experience in the markets. Ms. Horner has taught her brand of technical analysis and charting strategies to students all over the world. She is also the author of the bestselling “Forex Trading for Maximum Profit” and “Thirty Days of Forex Trading”. Emphasizing charting and price action and continues to teach the tools and strategies that encourage self-directed traders to pursue the study of chart analysis and market psychology. She is a much sought after public speaker who has conducted seminars in the US, Canada, the Caribbean, and Asia. For more information on Raghee’s analysis and trading email or visit