by Alex Davies on November 29, 2018

Dollar Index Analysis – history repeats itself!

We analyzed the Dollar Index about a week ago when we took an optimistic stance on the currency but saw a chance of a head and shoulders formation, which would lead to a bearish outbreak. Still, the price would have to break the neckline in order for the sell signal to be triggered and as it was above the line, chances for that weren’t very high.

Dollar Index Analysis - history repeats itself!

Like predicted, the price continued to increase, but only till yesterday. On Wednesday there was a reversal and a sharp drop as the Dollar Index started to test the neckline one more time. Although this time the right shoulder looks slightly different, the scenario is very similar to what was happening a week ago. The black uptrend line shown on the graph above held as the price bounced back after hitting it. This reinforces the support and is crucial for the technical analysis. As for the sentiment, as long as the price remains above the support, the buy signal is on. On the other hand, if it breaches the line from above, it will trigger a sell signal.

By Alex Davies

Alex Davies is a long-time trader with a background in statistical analysis. Davies has worked as a financial analyst since 2014 and has been writing technical analyses for various publications since 2015. Davies writes on different financial instruments including stocks, cryptocurrencies and currency pairs.

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