U.S. Dollar IndexShort
DXY Eyeing Lower Levels?
Despite wrapping up the week largely unmoved, the US dollar is on track to finish a fourth consecutive month under water, according to the US Dollar Index.
Following a one-sided deterioration in Q4 of 2022 from an ascending channel resistance, extended from the high 103.82, price action on the monthly scale is threatening to confront the lower perimeter of a decision point at 101.30-103.91.
As communicated in the previous weekly briefing, the research team underlined the following (italics):
Clearing the aforementioned monthly decision point reopens the risk of a further decline to monthly Quasimodo resistance-turned possible support at 99.67, closely tailed by a mild Fibonacci cluster just south of 99.00. In terms of the RSI, we can also see scope to drop in on the 50.00 centreline, a barrier that could offer indicator support. But, despite the above, while bears are clearly in the driving seat right now, trend direction has remained to the upside since early 2008 and the recent down move could just be another correction.
Meanwhile on the daily timeframe, trend direction continues to favour shorts. This is shown through the recent Death Cross. Fashioned through the 50-day simple moving average (104.64) crossing under the 200-day simple moving average (106.45), this signals the potential for a major trend reversal (though this is a lagging indicator and reflects past price movement). In addition to this, since establishing a peak (see monthly analysis), a series of lower lows and highs materialised (traditional bearish trend structure).
Knowing monthly price is treading water deep within a decision point, buyers and sellers on the daily chart are currently squaring off between Quasimodo support-turned resistance at 102.36 and Quasimodo support from 101.65 (merging with channel support, extended from the low 103.45). The recent consolidation, given the lack of buying on the monthly scale and the downtrend evident on the daily chart, is poised to breakout to the downside this week. Technically speaking, the aforesaid supports are the last line of defence for the monthly timeframe’s decision point. As a result, a breakout lower may encourage renewed selling, targeting at least daily demand at 100.27-100.77.
Finally, aligned with the daily downside bias, the daily timeframe’s RSI shows a temporary overbought region between 60.00 and 50.00. This is common in strong downtrends; therefore, this might be a location to keep an eye on over the coming weeks for signs of negative divergence and bearish failure swing signals.
Following a one-sided deterioration in Q4 of 2022 from an ascending channel resistance, extended from the high 103.82, price action on the monthly scale is threatening to confront the lower perimeter of a decision point at 101.30-103.91.
As communicated in the previous weekly briefing, the research team underlined the following (italics):
Clearing the aforementioned monthly decision point reopens the risk of a further decline to monthly Quasimodo resistance-turned possible support at 99.67, closely tailed by a mild Fibonacci cluster just south of 99.00. In terms of the RSI, we can also see scope to drop in on the 50.00 centreline, a barrier that could offer indicator support. But, despite the above, while bears are clearly in the driving seat right now, trend direction has remained to the upside since early 2008 and the recent down move could just be another correction.
Meanwhile on the daily timeframe, trend direction continues to favour shorts. This is shown through the recent Death Cross. Fashioned through the 50-day simple moving average (104.64) crossing under the 200-day simple moving average (106.45), this signals the potential for a major trend reversal (though this is a lagging indicator and reflects past price movement). In addition to this, since establishing a peak (see monthly analysis), a series of lower lows and highs materialised (traditional bearish trend structure).
Knowing monthly price is treading water deep within a decision point, buyers and sellers on the daily chart are currently squaring off between Quasimodo support-turned resistance at 102.36 and Quasimodo support from 101.65 (merging with channel support, extended from the low 103.45). The recent consolidation, given the lack of buying on the monthly scale and the downtrend evident on the daily chart, is poised to breakout to the downside this week. Technically speaking, the aforesaid supports are the last line of defence for the monthly timeframe’s decision point. As a result, a breakout lower may encourage renewed selling, targeting at least daily demand at 100.27-100.77.
Finally, aligned with the daily downside bias, the daily timeframe’s RSI shows a temporary overbought region between 60.00 and 50.00. This is common in strong downtrends; therefore, this might be a location to keep an eye on over the coming weeks for signs of negative divergence and bearish failure swing signals.
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