Above is the daily chart of US Dollar Index (.DXY). The index was able to pare some of its losses since Feb 2011 these few trading days.
However, DXY reaching the red downtrend resistance, the crazy surge was put to an end. We can see that US Dollar struggled to rise further, but the selling-force was just too large that a long upper shadow was formed, and it could not break out.
Good news (for USD Index) is that the price didn't just plunge as soon as it reached the line. Instead, it held quite firmly at the current level. This might be an indicator that the index was gaining more and more buying-force at this point.
A bullish flag might possibly appear if my observation (or guess) is correct. Support will be provided by the green line on the chart, which is at around 73.70.
If break out does happen, investors would be attracted to LONG US Dollar, and the stock market might slump due to out-flow of money.
Would it be the end of the surge of DXY, or is it just a start?
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