Break of lower trendline, more downside momentum on DXY likely

The US dollar index is at a turning point. For close to 6 months, this index has been in a converging symmetrical triangle that was playing out on the daily chart. During that time, many tests of both the upper and the lower bounds of the triangle have happened, but there was never an actual breakout. This has now changed.

On Friday, the DXY broke and closed below the lower trendline for the first time. It also broke the 5-month lows and it closed relatively strong to the downside. We need to see what happens next week, but my initial bet is that we might see more downside momentum. This would be in line with multiple setups I have added to my weekly watch list, where I also expect to see the dollar lose some strength. For more potential setups, have a look at my outlook for next week.

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