DXY Dollar Index We were looking for DXY to show signs of bottoming prior to potential reversal to the upside last week. It made a double bottom/slightly higher low showing a loss of downside momentum, the first signal needed to show a change is in the air. Some may remember the way that Gold shifted parallels just as DXY is now doing prior it bottoming out in mid December...now we have the same behaviour being displayed on DXY chart. Today, DXY is now pushing the upper parallel with near term resistance at 89.30 - it's in a small continuation pattern running under the parallel which at some point soon is likely to pop to the upside - but so far we have no great weight of evidence that DXY is doing much other than consolidating in a 120 pip range at current levels. We do have a double bottom which has resulted in range trading so far, but no higher high to signal a clear reversal as yet. Dollar bulls have to take DXY through the parallel and then above the lines of resistance at 89.30 and at 89.51 and finally above 89.65 to really start attracting other buyers - but until they can achieve this DXY is more likely to range trade, with some big green candles more likely to emerge now than big reds, and the price action after that green candle being more gentle consolidation prior to the next green candle emerging. So small bursts of upward pressure followed by mild but longer lasting consolidation - dull, grinding price action in near term but most likely with an upward bias. Still prefer to buy dips here though not aggressively so yet. Need to see 89.65 broken above and held to turn aggressively bullish of DXY looking for 90.19 initially and then, after consolidating, to 90.99 and then to the 91.80-91-90 range. On the downside, DXY has to break below key support at 88.43 to turn negative again in near term down to 87.70 where it becomes a buy again on any such weakness.
Comment
DXY Update Best estimations for likely minor resistance for DXY should it go on to break above the range soon at 89.62-89.65. So far DXY is doing well, having touched the upper limits of the range earlier and is now consolidating by moving sideways to down towards the suppport line below it at 89.29 where it should pick up support again. If so, the next surge higher should/must break above 89.65, triggering further buyers into the rally and taking DXY up through the various lines of resistance shown on the chart to a likely high at 92.50 where it will become vulnerable once again - if not trading the pairs for neart term rallies between each line on DXY chart as it breaks higher, all dollar swing longs across the pairs which have been triggered/confirmed by DXY breaking above 89.65 (and holding up on the next restest as final confirmation), should be closed down - or at least examined closely and stops raised high - at this critical point for DXY, as it touches 92.49. Downside - so far, technically this is range trading, plain and simple. But the last two pulses upwards have been bear engulfing and the last little move down was continuation. So far, this little consolidation looks like continuation too. So long as it holds up at 89.29 now DXY will look strong again. Even if this level fails it's likely that 89.02 will arrest any further decline from here. It's not confirmed yet - need to see that break above 89.65 to feel sure about it - but so far each move DXY has made since FOMC ended has been bullish.
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.