The US Dollar index
The US Dollar index (DXY) traces the US Dollar price against a basket of currencies. Therefore, it gauges the strength of the greenback.
If we look at the DXY daily chart, we may get some interesting observations. We can see that, since May, the price has been moving in an ascending pennant-like formation. Currently is moving downward and is touching the middle Bollinger line.
MACD
The MACD is a very handy indicator because it is able to show the changes in the sentiment of the traders. Here (see the chart at the bottom) we spot two interesting observations: one, it is changing from a bullish phase to a bearish one. Two, there is a clear divergence between the higher highs on price and the lower highs of the MACD signal.
The Pennant
The pennant is an indecision pattern. When ascending, it may draw an Elliott Wave bull diagonal ending pattern, and a beginning of a corrective leg down.
Looking at the DXY pennant, we observe that the price has to convincingly break the lower trend line, and also the 95 support level before concluding that DXY has started the corrective movement. Notwithstanding, we observe, so far, that the price action making new daily lows, the divergence on the MACD and, also its bearish phase, point on the direction of more lows.
As traders, we may also observe that the reward-to-risk ratio is very attractive for a short position.
Take your trading to the next level with our 14 Day, No Obligation, Free Trial. You will soon discover why we are trading’s best-kept secret. We are successfully building the world’s largest group of profitable traders and would like you to be part of it.
You can then join for as little as $19.99 per month, no strings, no contract, cancel anytime. This amount can be covered with just one profitable trade with us per month, the rest is pure profit. You will benefit from unparalleled access to our professional traders, our transparent trading performance, our LiveTradeRooms and access to the most comprehensive trading education on the market. What have you got to lose? JUST CLICK HERE TO GET STARTED NOW and see how real money is made!
