USD : Major Price Collapse

(Sun, 29 Nov 2020). The US Dollar Index is off more than 0.60% this week with DXY attempting to break below major long-term uptrend support just above the yearly lows. The technical implications of this break are massive and suggest a significant shift in the longer-term USD price outlook. These are the updated technical targets and invalidation levels that matter on the US Dollar Index weekly price chart.

Notes: In last review, DXY was testing major support and to be on the lookout for, “topside exhaustion ahead of 93.92 on recoveries IF price is heading lower with a close below 91.92 needed to fuel the next leg.” The index continued to test key technical support at the 2016 low / 2018 objective yearly open at 91.92-92.28 for over three-weeks with price attempting to close below for the first time since April of 2018 on Friday.

A close below would risk accelerated losses for the index with the first major weekly support objective eyed at the 2017 low-week close at 91.33 and the 2017 low at 91.01- look for a more significant price reaction there IF reached. Initial weekly resistance now stands back at 92.28 backed by the 93-handle. Broader bearish invalidation now lowered to the 61.8% Fibonacci retracement off the 2018 advance / 2016 low-week close at 93.88.

Bottom line: The US Dollar attempting to break / close below critical support zone at multi-year uptrend support – risk for accelerated losses while below 92.28. From a trading standpoint, look for topside exhaustions ahead of the former 2011 trendline on recoveries IF price is indeed heading lower – a weekly close back this slope would threaten a false-break scenario. That said, watch for sharp declines while below this threshold with initial objectives eyed at the 2017 lows - keep in mind we’re heading into the close of the month- stay nimble here.

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