DXY Breaking Bear Flag: The Dollar is under big bearish pressure!
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The US Dollar Index is breaking a bear flag
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Possible massive head and shoulder on the daily
The DXY (US Dollar Index) has been moving up slowly in a bear flag for about 20 days now. and we have been waiting for a clear break for what seems to be a test of a major support zone.
Let´s have a look at the daily chart:
The big support zone is that 99.0 - 99.5 zone where price gapped up and has been tested strongly twice already. Needles to say that buyers are heavily positioned here with short term sellers also taking profit at these levels.
If price completes this bear flag brak we could have a monster head and shoulders patter in our hands with this big support zone as the neckline.
Let´s zoom in on that flag now:
First if you look at the fibos from the 99.5-103.5 action (up move) the 50% comes at 99.8 which confluences with the 76.4% of the flag action. Big level in play once this pattern breaks.
But the immediate support would come at the 50% retracement of the flag around the 100.6 level which is a previous base / resistance zone. Momo traders are going to take profit here so watch it closely if/when we get there.
Our advice is for you to look for long opportunities in the EUR/USD (given that 1.0500 rejection) and short opportunities un the USD/JPY if the scenario plays out.
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