Dollar Index Price Forecast: DXY falling within channel

Source Fxstreet
May 3, 2024 12:05
  • The US Dollar Index has been trading in a rising channel for several months. 
  • After touching the top of the channel it reversed course and started to fall towards the lower channel line. 
  • Price is close to support and the RSI is oversold signaling a likely pause in the downmove. 

The US Dollar Index price (DXY) is declining within a multi-month long rising channel after touching the top borderline and rolling over. 

Given price tends to oscillate within a channel the Dollar Index is probably in the midst of a down-leg which means there is a good chance it could continue falling to the lower borderline before probably bouncing and resuming its trend higher.

Dollar Index 4-hour Chart

Dollar Index price is now falling close to a sturdy support level at 104.97 composed of several old peaks occurring at that height. The green 200 Simple Moving Average (SMA) also lies close at 105.09 and will probably offer support.

The probability price could find a floor is increased by the fact that the Relative Strength Index (RSI) is potentially signaling oversold – depending on the close of the current bar. If it does, then this will indicate a higher chance price could find a floor and consolidate. When RSI enters oversold it is a signal for traders not to add to their short positions. 

A decisive break below the support level at 104.97 would signal a continuation down to a possible target at the lower channel line, at that point, in the vicinity of 104.00.

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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