Above is the daily chart of US Dollar Index (.DXY). Due to the financial debt concerns in Europe, the Euro has slumped greatly, causing a great surge in USD and hence .DXY as it consists of more than half Euros.
We can see that the index just broke a major resistance level. This breakout signals a change to bullish trend of US Dollar. Investors should be aware of it.
Using the high and low in 2011, I drew a fibonacci retracement. 50% level is at around 77.0, and this would be the next selling-level for US Dollar.
The red down-trend line is another resistance. It is actually quite strong as the index has not been above it since the Dollar started to fall. We can expect a huge selling force at around 76.8.
Therefore, the next challenge for the index would be around 76.8-77.0. For downside, we can expect the level of 76 turns to support after the breakout. So this level would be the support line.
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