Saturday, January 16, 2021

US Greenback Index (DXY) Has Potential to Run In direction of Take a look at of Essential Resistance

USD Technical Outlook

  • US Greenback Index (DXY) broke near-term downward channel
  • March trend-line, September low may come into play quickly
  • A take a look at of resistance may mark vital take a look at of the downtrend

DXY has room to commerce larger into resistance take a look at

The US Greenback Index (DXY) is in bounce mode with some room to run earlier than an vital take a look at of resistance takes form. That is growing throughout the context of a medium-term downtrend following a flip from help, which makes it significantly fascinating to see how such a take a look at could play out.

What’s giving the transfer extra respiration room is the breaking of a downward sloping channel (most simply seen on the 4-hr) chart. Conversely, as checked out within the weekly Euro technical forecast, EUR/USD (57% of the DXY weighting) is falling out of a rising channel.

One other issue serving to bolster the bullish case now’s the truth that the highest of a help zone was tagged final week, which led to a weekly reversal candle. The zone dates to the 2009 excessive that grew to become resistance in 2019 and help in 2018. Will this flip larger mark a significant low because it had three years in the past?

That’s arduous to say now, however maybe if that’s the be the case there shall be a extra thorough testing of help that drags out a number of weeks to some months. However a rally from right here to the September 1 low at 91.74 and trend-line from March would qualify as countertrend take a look at that would assist present extra readability on the broader development.

On the sentiment entrance, a weaker USD has turn out to be a prevalent theme amongst market individuals, so from a contrarian standpoint the established order could also be overdue for a testing if not outright reversal.

USD Forecast

USD Forecast

Beneficial by Paul Robinson

Try the Q1 USD Forecast

US Greenback Index (DXY) Weekly Chart (turning from help in the direction of resistance)

US Dollar Index (DXY) weekly chart

DXY 4-hr Chart (broke downward channel)

DXY 4-hr chart

DXY Charts by TradingView

Assets for Foreign exchange Merchants

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—Written by Paul Robinson, Market Analyst

You’ll be able to comply with Paul on Twitter at @PaulRobinsonFX

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