The graph above shows the 2013 annual support and resistance levels for US$ index, namely DXY. According to the analysis of the year 2013, 83.50 was a major resistance level. So, there are no monthly closes above that level.
Currently, we are in 81.50 resistance zone and the continuous envelope has been squeezing since 2012. The squeeze indicates a burst. What is the direction of the burst, is the million dolar question. By this writing, I will try to find an answer for the question.
The graphic below presents annual support and resistance levels for US$ indice. As it is clear from the graphic, prices are a little bit higher than resistance level at 81.00. Target resistance in order is 83.50 level. As of August 13, DXY is 81.61. The price difference between resistance levels is paving the way for a 400 pips drop for EUR/USD.
Meanwhile the squeezing envelope signals that US$ indice will rise up to 89.50 level and EURUSD will drop by 1600 pips.
Since we are in 3rd Quarter and enough data has been collected for the annual bar. Assuming that current data is correct and annual bar will be completed as of today. Then, we can forecast price levels for the 2015 annual bar of DXY.