If you haven't read VOLUME I of my DOLLAR (DXY) ANALYSIS trilogy, it is highly recommended you read that first. Because there I talked about what I expect the U.S. Dollar to do in the next few years. On the other hand, the second part of the analysis, which is this post, is more about what has been happening in the past few weeks and what is expecting us in the next few weeks.
As mentioned in the VOLUME I of the analysis, we have recently formed a HUGE HEAD AND SHOULDERS pattern on the MONHTLY chart and DXY broken down to the downside. After such break down, it is likely for the price to backtest the previous support but now resistance levels. We have been through that stage in the past two weeks. Especially last week, we saw the test of the previous support trendline on the weekly chart.
It is still possible that the U.S. dollar can move higher, but considering the HEAD-AND-SHOULDERS pattern formation and the size of the pattern, it is VERY VERY UNLIKELY that the dollar goes above the level of 95. If we strongly break above the 95-level and get a weekly close significantly above 95, like around 97-98 levels, then the HEAD and SHOULDERS pattern signaling weakening DOLLAR is invalid. However, it has a very low probability to me.
The backtest can continue this week, as well, but I don't expect it take longer than a week since the move started two weeks ago and backtested the previous support at the end of last week.
I shared my view and the harmonic analysis of the daily/weekly DXY in the third part of the trilogy.
Have a great week!
As mentioned in the VOLUME I of the analysis, we have recently formed a HUGE HEAD AND SHOULDERS pattern on the MONHTLY chart and DXY broken down to the downside. After such break down, it is likely for the price to backtest the previous support but now resistance levels. We have been through that stage in the past two weeks. Especially last week, we saw the test of the previous support trendline on the weekly chart.
It is still possible that the U.S. dollar can move higher, but considering the HEAD-AND-SHOULDERS pattern formation and the size of the pattern, it is VERY VERY UNLIKELY that the dollar goes above the level of 95. If we strongly break above the 95-level and get a weekly close significantly above 95, like around 97-98 levels, then the HEAD and SHOULDERS pattern signaling weakening DOLLAR is invalid. However, it has a very low probability to me.
The backtest can continue this week, as well, but I don't expect it take longer than a week since the move started two weeks ago and backtested the previous support at the end of last week.
I shared my view and the harmonic analysis of the daily/weekly DXY in the third part of the trilogy.
Have a great week!