In this article, we will take a look at the key ongoing consolidation on the market and possible outcomes near-term.
Looking at the monthly chart we can see that DXY US dollar Index is trying to bounce off the strong confluence of the support. At the 87-91 zone, we have aligned the 100 SMA along with the 50% Fibonacci resistance of the last swing up and also the historical horizontal support line. A visible upside resistance and the downside support is 200 SMA 91.655 level.
The weekly chart is revealing more about the direction near-term in the DXY index. A continuation triangle has been formed below the strong upside horizontal resistance zone 90.050-91, and also below the 34 and 55 WMA
As long as this zone is holding the price action and the 91.20 level we could see a downside extension which will lead to a USD weakness across the market.
Using our top-down trading analysis it is easy to reach a conclusion about the direction and a possible trade entry for each of the instrument in the market. On a daily chart now we know that the 91-91.250 zone is the key near-term, and the 100 SMA hold is pointing to a bearish continuation.
In the following days and weeks, we will look for the short entry opportunities in the USD pairs across the market because we believe that the bearish continuation for at least a test of the 87-88 zone will be on the way.
Happy trading! (click on the chart to enlarge it)
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