Thursday's Market Minute: Dollar's Dip Continues As More Support Is Breached

The U.S. dollar has seen some ugly price action for the bulls in recent months, as the /DX futures contract is now down more than -9.5% off its yearly highs near 114.74. The greenback recently breached the area near the 105 level, which represents a peak from early June and the August lows, and also broke through the 252-day Exponential Moving Average which is currently near 104.33.

The two commonly followed shorter-term exponential moving averages, the 21-day and 63-day, are both trending downward and diverging away from each other, which suggests the downtrend is not slowing down yet. Price is also now near the 103.50 level, which represents a range low from June and could be a source of support to watch as well.

But in the shorter-term, there are a couple of potentially bullish developments. First, the dollar looks to be forming a falling wedge-type pattern in that there’s a steep trendline going downward across the highs and a much shallower trendline going downward across the lows.

This pattern is typically regarded as being more bullish, though take care to note that this is not a guarantee by any means. Second, the Relative Strength Index (RSI, which measures momentum of price change) is showing some bullish divergence. This means that price was making new lows below its previous lows but the RSI trended upward, which suggests price is improving. 

The upside point to watch is once again the 105 level, but price first needs to break above its falling wedge pattern. If the 103.50 level is broken to the downside, the next important bottom is near the 101.20 level which represents lows from May.

Image sourced from Shutterstock

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.