DXY Dollar Index: Approaching reversal point

28 янв. 2018 г.

DXY Dollar Index
Long Term
We've been aggressively bearish of the Dollar since that first
break below 98.5 back in early May last year. Down another
11% since then it's coming time finally to think about reversing
back long again soon. DXY has already hit and bounced from
the support line at 88.44. Below here lies a long term dynamic
support line which has effectively stalled all Dollar declines
since 2011. It lies at 87.70 and even if DXY suffers one last
decline from here it should halt at 88.44 and at absolute
worst at 87.70 during the course of this week - we should see
the final low put in this weekcoming , and likely by the
following week at latest if we don't hit the bottom this week.
Look to close out most shorts across the dollar pairs into this
final selling climax if we see it materialise over the next few
days. Swing traders should now, finally, be looking to follow
suit too.
DXY Shorter Term
Last week DXY made a new low at 88.44 before bouncing 1%
to 89.51 resistance line with a high at 89.53...The 88.44 level
is one of two likely levels to look for a reversal in trend, the
other being the longer term dynamic support line, at 87.70
now. If the first level is to be the reversal point DXY will
continue rallying from here and not break below the tiny
rising dynamic directly under price right now...then comes
the bigger test: it has to break above the upper parallel and
break 89.53 and then hold on the retest - that would flip DXY
back to near term positive and send it back to 92.62 and the
falling dynamic resistance line shown on the chart above,
where it's next major challenge will most likely lie. Follow
that break if we see it materialise at any point this week
Downside
If in the alternative DXY loses the little dynamic holding it up
and then falls below 88.88 it will fall back to 88.44 again and
if it cannot base there and make a double bottom it will fall
away to the second key level at 87.70 - at which point it
should start to find some support. If so start closing out dollar
shorts and look to build longs from here. Otherwise, the
safer/less risky option for swing traders is to forget about
bottom fishing wait to see at what point DXY finally exits the
upper parallel of this impulse wave - which has, so far,
controlled all upside potential for DXY throughout this
current down-wave - and follow that break when it eventually
comes, looking for 92.60 initially.