DXY Technical Analysis – Week of October 14-18, 2024
Overview: The Dollar Index (DXY) recently tested a significant resistance level at 102.00, which has proven to be a critical zone in the past, acting as both support and resistance. This rejection signals potential weakness in the dollar and suggests that the bears may take control in the short term.
1.Resistance at 102.00: The 102.00 level has proven to be a strong resistance zone in the past, where the DXY had previously consolidated before a breakdown. The price attempted to push above this level but was swiftly rejected, signaling that sellers have defended this area. This zone also coincides with historical support-turned-resistance, making it a critical price point.
2. Bearish Outlook for the Week: Given the rejection off 102.00, the DXY is likely to experience further downside pressure in the short term. I’m favoring a bearish outlook for the dollar this week, with the expectation of a retracement back towards the key psychological level of 100.00. This level not only holds psychological significance but also aligns with horizontal support from previous price structures.
3. Potential Target – 100.00: The 100.00 mark represents a major confluence zone where the price may find buyers stepping back in. This area has historically acted as a solid support and is likely to attract attention from market participants, making it a key target for short positions. A breakdown below 100.00 could trigger further downside momentum, potentially extending towards 98.60, which is another significant support zone visible on the chart.
4. Trendline & Long-Term Perspective: The chart shows a longer-term upward trendline that has yet to be retested. Should the DXY continue its decline, a bounce off the trendline could be possible. However, if momentum accelerates to the downside, it’s worth noting that a break below 100.00 might lead to a deeper correction, potentially retesting lower support levels, such as 98.60.
5. Momentum & Confirmation: From a technical standpoint, it’s important to watch for confirmation from momentum like Bearish engulfing, which we already have an evening star. If we see bearish divergence or continued rejection of the 102.00 level, it will further support the bearish thesis. Additionally, a break below 101.00 could confirm the continuation of the bearish trend for the week ahead.
Conclusion:
The Dollar Index appears to be forming a bearish structure, with the 102.00 level acting as a strong resistance. My bias for the week favors short positions, targeting a retracement to the 100.00 level. This outlook is contingent upon continued rejection of the 102.00 level and potential follow-through below 101.00. Traders should remain cautious and wait for further confirmation from their startegies and price action before committing to positions.
1.Resistance at 102.00: The 102.00 level has proven to be a strong resistance zone in the past, where the DXY had previously consolidated before a breakdown. The price attempted to push above this level but was swiftly rejected, signaling that sellers have defended this area. This zone also coincides with historical support-turned-resistance, making it a critical price point.
2. Bearish Outlook for the Week: Given the rejection off 102.00, the DXY is likely to experience further downside pressure in the short term. I’m favoring a bearish outlook for the dollar this week, with the expectation of a retracement back towards the key psychological level of 100.00. This level not only holds psychological significance but also aligns with horizontal support from previous price structures.
3. Potential Target – 100.00: The 100.00 mark represents a major confluence zone where the price may find buyers stepping back in. This area has historically acted as a solid support and is likely to attract attention from market participants, making it a key target for short positions. A breakdown below 100.00 could trigger further downside momentum, potentially extending towards 98.60, which is another significant support zone visible on the chart.
4. Trendline & Long-Term Perspective: The chart shows a longer-term upward trendline that has yet to be retested. Should the DXY continue its decline, a bounce off the trendline could be possible. However, if momentum accelerates to the downside, it’s worth noting that a break below 100.00 might lead to a deeper correction, potentially retesting lower support levels, such as 98.60.
5. Momentum & Confirmation: From a technical standpoint, it’s important to watch for confirmation from momentum like Bearish engulfing, which we already have an evening star. If we see bearish divergence or continued rejection of the 102.00 level, it will further support the bearish thesis. Additionally, a break below 101.00 could confirm the continuation of the bearish trend for the week ahead.
Conclusion:
The Dollar Index appears to be forming a bearish structure, with the 102.00 level acting as a strong resistance. My bias for the week favors short positions, targeting a retracement to the 100.00 level. This outlook is contingent upon continued rejection of the 102.00 level and potential follow-through below 101.00. Traders should remain cautious and wait for further confirmation from their startegies and price action before committing to positions.
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