The USD Index popped higher yesterday. Is that move something typical of a back-and-forth trading, or a harbinger of a budding upswing? What do the charts tell us about the days ahead for the USD?

Meanwhile in oil, yesterday's session brought us another confirming sign of the upcoming move. It might not appear as such considering the little change from opening levels, but the shape of the candle and the closing price itself are sending an important signal. Let's see the charts to find out how it'll impact our profitable open position.

As you've read in the previous Oil Trading Alerts and Forex Trading Alerts, Nadia Simmons, who is the author of these reports has not been feeling well. This remains to be the case, and as it's been several days since you received crude oil or forex analysis from us, I (PR here) would like to help.

Consequently, I will be writing analyses of both: crude oil and the forex market and I will publish them combined, so that those, who normally enjoy access to only one of these reports, will get something extra. That's not much of a positive surprise for those, who already have access to both Alerts (for instance through the All-Inclusive Package), so if you have access through this package or you subscribed to both products individually, I will provide you with something extra. I will analyze any company of your choice with regard to its individual technical situation, and I will send you this on-demand analysis over e-mail. If this applies to you, please contact us with the name of the company that you're interested in.

Having said that, let's take a look at the crude oil market.

Crude Oil Analysis

Today's analysis is once again going to be short as practically nothing changed with regard to the crude oil outlook, and the only thing that actually changed, confirmed the bullish case for the next several days. In other words, the profits on the long positions are likely to grow further before we close it.

Let's examine the most recent developments.

Crude oil declined yesterday, but it recovered before the day was over. The decline was most likely a form of verification of the breakout above the declining resistance line that's based on the September and early-October closing prices. In yesterday's analysis, we warned you that crude oil might test the breakout above the resistance line by declining a bit, but overall the upside potential for this trade remains intact. That's exactly what happened and the upside potential for this trade does indeed remain intact.

Yesterday's close is the second close above the declining resistance line, which makes the post-breakout rally even more likely as the breakout is now almost confirmed. It will be fully confirmed once the black gold closes above the resistance line today. The shape of yesterday's session - the reversal and invalidation of the intraday decline - also has bullish implications.

Consequently, our upside target of about $56 remains intact - it's based on the 38.2% Fibonacci retracement level and the likelihood of a rebound to the previously broken support line. This line is visible on the below medium-term chart.

The rising green line is very close to the $56 level. That's above the 50-day moving average, but let's keep in mind that this moving average has rarely stopped the previous rallies. Instead, it was usually insignificantly broken to the upside before the short-term rallies ended. We saw that multiple times in August.

The buy signal from the Stochastic indicator is now clear and thus we expect more traders to join the long side, contributing to higher crude oil prices in the near term.

Consequently, in our view, the current long position is justified from the risk-reward point of view.

Trading position: Long position in crude oil with a stop-loss order at $49.88 and the binding profit-take target at $55.88 is justified from the risk/reward perspective.

Forex Analysis

As far as the currency market is concerned, Nadia usually covers the individual currency pairs. However, that's not what I specialize in, so instead of the usual format of these analyses, I will maximize their usefulness and likely profitability. This means that instead of focusing on individual currency pairs, I will cover the USD Index, as that's what I've been following on a regular basis for years.

It's also tradable, as there are futures on it (DX symbol) as well as ETFs, for instance the UUP and the UDN.

In short, nothing really changed in the USD Index based on yesterday's price movement so everything that we wrote in the previous Alert, remains up-to-date. We will provide you with a more detailed update nonetheless.

Let's start with the short-term USDX chart, as that's the only place where we can see any changes.

The USD Index moved higher, so you might be wondering if we missed the best buying opportunity. This might be the case, but let's keep in mind that the current upswing is still in tune with the size of the back and forth movement that we saw in the second half of September. Consequently, yesterday's upswing might be just a small bounce and not the beginning of the next upswing. Another test of the October lows appears likely before the USDX truly takes off. After all, history tends to repeat itself and that's how the August and September rallies started.

All in all, there was not much action in the currency market recently, but it seems that it's better to simply wait out the unclear times while sitting on profits from the previous trade. The next trade will likely be a bet on higher USDX values and it's likely that we will enter it within a few short days.

Why are we focusing on the long positions in the USD Index? Because of the long-term trend, which remains up.

Our previous comments on the long-term charts remain up-to-date:

The USD Index is after a major long-term breakout and this breakout was already verified a few times. The most recent rally is just the very early part of the post-breakout rally. Much higher USD Index values are likely to follow in the upcoming months.

The long-term trend is up as even the dovish U-turn by the Fed, rate cuts, and myriads of calls from President Trump for lower U.S. dollar and much lower (even negative) interest rates, were not able to trigger any serious decline.

What we saw instead was a running correction that's the most bullish kind of corrections. It's the one in which the price continues to rally, only at significantly smaller pace.

Trading position (short-term; our opinion): No position in the USD is justified from the risk/reward perspective at the moment of writing these words. We will probably enter a long position in the USD Index shortly.

As always, we will keep you - our subscribers - informed.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager