DXY is in a big falling wedge pattern which is one of the most bullish patterns to trade in the market. On Friday DXY created an inverted hammer reversal candlestick pattern which is bullish, and we will see moves from today will there be confirmation of it or not (on the bullish side)?
RSI is way oversold and had strong and several months-long bullish /positive divergences which will act as a price mover for sure.
MACD histogram negative tick is rising while the MACD line is still below the signal line which is bearish, however, MACD also has strong and powerful positive bullish divergences.
Overall: DXY is way oversold at the moment and it is due for a bounce. Also, it is at the lower side/ trend line of the falling wedge, a bullish pattern. The question is will DXY bounce only to the fat blue trading line which was formed in the summer of 2021, touch it, and got rejected or will it pump above it?
It is almost certain DXY will bounce and if it close and move above the area of resistance marked with a red circle (falling trend line, 20 days MA, and rising trend line ) we will see a major pump in DXY because it will represent only fakeout and dead hook and pump could be fast and strong.
However, if it only touches this area of resistance and falls it will form only a bear pullback and will continue to drop further.
From a fundamental point of view, I assess there is a high possibility FED will help dollars no matter what and how. The weak dollar has strong inflation pressure and we don't need more pressure on inflation because we don't need more rate hikes. I would not be surprised if FED go and increase the FED fund rate by 0.5 just to save dollars and finally explain market not to fight with the FED.
RSI is way oversold and had strong and several months-long bullish /positive divergences which will act as a price mover for sure.
MACD histogram negative tick is rising while the MACD line is still below the signal line which is bearish, however, MACD also has strong and powerful positive bullish divergences.
Overall: DXY is way oversold at the moment and it is due for a bounce. Also, it is at the lower side/ trend line of the falling wedge, a bullish pattern. The question is will DXY bounce only to the fat blue trading line which was formed in the summer of 2021, touch it, and got rejected or will it pump above it?
It is almost certain DXY will bounce and if it close and move above the area of resistance marked with a red circle (falling trend line, 20 days MA, and rising trend line ) we will see a major pump in DXY because it will represent only fakeout and dead hook and pump could be fast and strong.
However, if it only touches this area of resistance and falls it will form only a bear pullback and will continue to drop further.
From a fundamental point of view, I assess there is a high possibility FED will help dollars no matter what and how. The weak dollar has strong inflation pressure and we don't need more pressure on inflation because we don't need more rate hikes. I would not be surprised if FED go and increase the FED fund rate by 0.5 just to save dollars and finally explain market not to fight with the FED.
Consistency is the key of success....
