themarketzone

Does U.S dollar have power for one more bullish run?

INDEX:DXY   US DOLLAR CURRENCY INDEX
The last two setups I posted here for U.S Dollar index were bearish:
1. Bearish Gartley (yellow)
2. Bearish continuation move from 97 - Structure resistance , 50 SMA line and 61.8 Fib
Both of them were successful

Now, $DXY is sitting on an interesting support zone:
1. 200 SMA line (strong support)
2. Two previous trend lines (green and red dashed lines) that should act as support now
3. Near 94, the price will meet the weekly 50 SMA line.
4. 61.8 Fib retracement level to latest swing high

This zone between 94-95 is the focus zone for the next few days (perhaps till FOMC)

If USD has more bullish power in it, it may try to reach 97 again. There it will complete another bearish Gartley pattern (red pattern). That's actually an Aggressive Bullish C entry for those of you who familiar with harmonics - You buy the C point and trade the run towards pattern completion.

If $DXY will fail to hold this support, it may head towards a daily/weekly correction move that could reach all the way down to 90

The RSI shows some bullish momentum following August's decline.

BTW - The monthly chart shows that the price is right on top of the 50 Fib level after hitting the 61.8 Fib level back in April 2015.

I'm pretty neutral at this point, looking to see how the price will react to this week's news and If you read this week's Weekly Markets Analysis and the $EURUSD analysis, you've seen that $EURUSD is also facing a critical structure zone - 1.14 (see linked idea)

As long as $DXY is above 95, I tend to be bullish (at least for the short term). If it'll drop below 95 towards 94, I'll start being suspicious although the 50 SMA line (weekly) near 94 is definitely a strong supporting element that can push $DXY back towards 97 and perhaps even higher.


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