By reaching a low of 78.915 in the last week of January 2013, the Dollar index made a double bottom – it made the first bottom of 78.725 in early September. The index completed the pattern in late February 2013, by breaking above the intermediate high of 81.515 between the two bottoms made in the second week of November. The up-thrust in the current week of 20th May took the index to a high of 84.59. This is equal to the measured target of the DB pattern. It is also slightly higher that the high of 84.245 made in the week of July 23, 2012. See the weekly chart below.
The measured target of 84.115 and the previous high of 84.245 created two resistance points. The third resistance point is at the Fibonacci levels of the index’s fall from the high of 89.100 made in the week of June 7, 2010 to low of 72.860 made in the week of May 2, 2011. The current level is between the 61.8% and 78.6% Fib levels – near 70.7% retracement.
So it is not surprising that the index is stalling at these levels. Presently it is searching for a reason to continue going up and also looking for s good support. There are few previous highs that may act as a support. On its way down from July 2012 high, the index made and small rally high of 83.61 on August 2, 2012. It tested this high on April 4, 2013 before retreating. Presently the index is at this level. This support was also strengthened during the up-and-down moment of the past few days. If the index breaches this support then there are three levels that may act as a short term support – a) 38.2% Fibonacci level of 83.33 and high of 83.32 made on April 24; b) 50% Fibonacci level of 82.98 ad the low of 83.045 made on May 14; c) 61.8% Fibonacci level of 82.60 and the measured move target of 82.50 from the horizontal congestion zone formed in the last week. See the daily chart below.
All of these support levels will come in play if the index breaks below 83.52, the low made on May 22nd. If the index breaks above May 24th high of 84.02 then it may retest the high of 84.59. A break above that high will take it to the 78.6% Fibonacci level of 85.624 on way to the June 7, 2010 high of 89.10.