Chart of the Week: US dollar in focus at demand area, forex hoping for spike in volume


  • DXY is in a phase of accumulation in consolidated markets. 
  • The week ahead will be key for the US dollar and volatility could pick up soon. 

The US dollar is a keen focus for the week ahead.

The US Dollar Index (DXY), which gauges the greenback versus a basket of its main competitors, is in a phase of accumulation, and there could be a much-needed pickup in volatility ahead.

As it stands, forex volatility is at its lowest in over a year:

 

Monthly chart

The US dollar is firming at the monthly support area and would be expected to continue doing so until at least a strong retest of the near term resistance and the 50% mean reversion of the latest bearish impulse. 

Weekly chart

The weekly chart illustrates the bullish bias for the near term from monthly/weekly support.

There are a number of market structures worth noting on the way to the monthly 50% mean reversion target.

The weekly 38.2% Fibo has a confluence with old support that could prove challenging for the bulls prior to a test of the resistances higher up.

Daily chart

The W-formation is a bearish pattern within this phase of accumulation. 

The neckline of the formation would be expected to act as support prior to the next leg higher.

4-hour chart

The DXY is capped at the resistance zone and would be expected to retrace the rally to retest old highs. 

Hourly chart

The bears are in control for the open with the price en route for a restest of the prior resistance where a confluence of the 21-hour EMA and the 50% mean reversion level meet. 

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD: Teases 21-DMA support inside falling channel

EUR/USD edges lower around short-term support after five-day losing streak. EUR/USD holds lower ground near 1.1835, around the seven-day bottom, amid Friday’s initial Asian session.

EUR/USD News

GBP/USD: Hangs in the balance of NFP, breakout imminent

Cable rose as high as $1.3949 after the BoE decision but was unable to break the resistance needed for an upside continuation in the daily time frame. Cable rose as high as $1.3949 after the BoE decision but was unable to break the resistance needed for an upside continuation in the daily time frame. 

GBP/USD News

Gold on the brink of a significant breakout around NFP

Gold is now in the balance of the NFP numbers on Friday. The market is taking into consideration a more hawkish tilt at the Fed. Technically, the price is at a critical juncture and a breakout could be imminent one way or the other.

Gold News

ICON looks extremely bullish in the long-term as ICX price targets $3

A brief technical and on-chain analysis on ICON price. Here, FXStreet's analysts evaluate where ICX could be heading next as it looks ready to continue surging.

Read more

US July NFP: Analyzing major pairs' reaction to NFP surprises

NFPs in US is expected to rise by 870,000 in July. There is a strong correlation between surprising NFP prints and major pairs' immediate movements. Investors are likely to react to a disappointing NFP more strongly than a positive reading.    

Read more

Majors

Cryptocurrencies

Signatures