DXY Tests Resistance at $109.53: Signs of Downward Pressure

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DXY

DXY Tests Fractal Resistance at $109.53
Signs of Downward Pressure and Potential Pullback

The DXY has recently tested a crucial resistance at $109.53 but is now showing signs of downward pressure. In this post, we’ll break down the key technical factors indicating the possibility of a corrective move and what traders should watch for in the coming days.

Several technical factors now point toward the possibility of a pullback or bearish movement in the DXY:

1. Bearish Divergence Signals
Bearish divergence occurs when the price hits new highs while momentum indicators start to weaken. In the case of the DXY, we are seeing this type of divergence, suggesting that buying pressure is diminishing. This could be a signal that the uptrend is losing momentum.

2. 61.8% Fibonacci Retracement Level at $108.98
The 61.8% Fibonacci retracement level is widely considered one of the most important levels in technical analysis, and currently, it is acting as a key resistance zone at $108.98. This level plays a critical role in determining whether the DXY will maintain its upward momentum or begin a correction. As it stands, a failure to break above this level could signal the start of a deeper pullback.

3. Completion of the Bearish Crab Pattern at $109.85
The DXY has recently completed a bearish crab pattern at $109.85, corresponding to the 161.8% Fibonacci extension. This pattern typically signals that the market has exhausted its upward movement, and a pullback/reversal could be imminent.

4. Completion of the Elliott Wave Structure: Wave 5 Equals Wave 1
Elliott Wave analysis also suggests a potential end to the uptrend. The DXY has recently completed a five-wave structure to the upside, where Wave 5 equals Wave 1, indicating that the rally may have run its course. This increases the likelihood of a corrective phase.

What to Watch For: Potential Pullbacks
Given the current technical setup, traders should closely monitor the following key levels for signs of a pullback:

• $109.53: The fractal resistance level recently tested.
  

• $108.98: The major 61.8% Fibonacci retracement level, as a potential element of resistance.
  

• $109.85: The completion point of the bearish crab pattern, a crucial level for confirming a reversal.
  

If the DXY begins to break below these levels, we could see further downside movement, with the potential for a deeper correction.

Happy Trading,
André Cardoso