US Dollar at Key Resistance Heading into the Weekend
|Today’s price action in the US Dollar (DXY) gave the markets reason for a pause in its ascent back towards the recent highs near 99.00, closing below key resistance near 98.20. On a daily candlestick chart, today’s bar was a perfect shooting star! This one candle formation is generally a reversal signal in which bulls come in early and push the market higher. However later in the day, sellers take control and push the price lower to close near the opening price.
Source: Tradingview, FOREX.COM
Think about the psychology here for a minute:
Buyers pushed the price above 98.27 resistance (blue line), which takes out the stops of anyone who placed them just above that resistance level, causing more buying to occur. Once weak shorts have been stopped out, sellers come back in and push the price lower. This triggers stops of any weak longs who entered the market above the 98.27 resistance level, causing those buyers to get stopped out and therefore pushing price lower. The next day, selling typically continues and price closes lower on the day.
Therefore, if price continues lower in the US Dollar on Monday, US Dollar bears may look to buy Euros and GBP vs the USD, as these two currencies make up a majority of the DXY Index.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.