- The US dollar is under pressure at the start of the week.
- Bears seeking downside extension towards weekly support.
The greenback has been pressured due to the US elections and prospects of additional stimulus.
However, the price has been in freefall and a correction can be expected from a technical standpoint.
The following offers a top-down analysis and the scope for a correction before a downside correction towards the weekly support.
Monthly chart
-637404775311330800.png)
The price is down to test a monthly support structure that happens to meet long-term trendline support.
However, depending on where the trendline is drawn, bears may take the view that a more reliable trendline is as follows:
-637404779093844202.png)
This has been tested more times and can be considered more reliable.
Significantly, it has acted as a counter-trend line resisted on a retest.
Weekly chart
-637404775588326579.png)
The retest of the trendline printed a 50% mean reversion, offering an extra layer of confluence to the downside case for the dollar.
Daily chart
-637404775900560076.png)
From a daily perspective, a correction can be expected at this level of support from which either a 38.2% or somewhere close to a 60% retracement meeting prior structures could equate to the next leg lower.
The first target that the bears might consider would be a -272% Fibonacci of the weekly bullish correction.
4-hour chart
-637404776134703525.png)
However, technical conditions still remain bearish, so there is no confirmation that the downside is not still in play.
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