Dollar’s Retreat Adds Considerable Weight to a Five-Month Reversal Pattern

Talking Points:

  • The Dollar finally started to slip this past week following the longest run since the 2016 election
  • DXY and EURUSD cued ‘right shoulders’ on reversal patterns, now the real pressure builds
  • Download our recently released fourth quarter forecast for the Dollar and majors here

Technical Forecast for US Dollar: Bearish

The Dollar’s steady climb between the closing week of September and opening week of October was brought to a close this past five-day stretch. Intention for a turn was starting to show through in momentum, even if the explicit resistance levels were not particularly remarkable. In this environment – for the financial system rather than just FX – momentum should trump explicit lines or zones of support and resistance. Too many false breakouts have shown up in otherwise ‘clean’ charts over the past few months. For the DXY Dollar Index, progress started to flag with rate of change (ROC) and momentum (MOM) indicators flagging a divergence to price. With the second effort to overtake 96.20 rejected, a double top seemed to cap bulls’ enthusiasm for a run having already seen the close of the 7-day advance the week prior through October 3rd

Article source: https://www.dailyfx.com/forex/technical/article/fx_technical_weekly/2018/10/12/Dollars-Retreat-Adds-Considerable-Weight-to-a-Five-Month-Reversal-Pattern.html