At 19:33 GMT, DXY is trading 98.806, up 0.200 or 0.20%.
DXY is currently trading inside the 50-day moving average at 98.834 and the 200-day moving average at 98.530. This suggests an imminent breakout.
Taking out the 50-day MA with conviction could trigger an acceleration into the short-term retracement zone at 99.138 to 99.493. A break back under the 200-day MA could lead to a retest of the 98.097 to 97.496 retracement zone.
Despite this week’s gains, the trend is still down. This move is being fueled by last Friday’s closing price reversal bottom at 97.632. Typically, this chart pattern leads to a 2 to 3 day rally equal to 50% to 61.8% of the recent break. So we’re not expecting a major breakout yet.
The minor top is 99.183 and the major top 100.643. If buyers take out 99.183, the minor trend will change to up and momentum will shift to the downside, however, unless it can breakout over the 61.8% level at 99.493, the rally is likely to die inside the short-term retracement zone.
Our short-term forecast is neutral-to-bearish with 98.07 our potential floor and 99.138 our expected ceiling. This type of set up usually indicates a cautious trade with traders waiting for more clarity.
