Dollar is coming back from the shadows. USD received a heavy blow from the FED last week, when we found out that we should not count on many hikes this year. The drop caused by that fundamental factor was also very important from the technical point of view. It allowed to break the long-term up trendline (blue), which was connecting higher lows since May.
That suppose to be great for the sellers right? Well yes, if only they managed to stay below that line. Yellow rectangle on the chart, shows us a false breakout. That is what happened with that movement – it was fake. On Thursday, the Dollar Index created a bullish candle with a long tail, which showed us that sellers were not very committed with that breakout.
The new week, started for the DXY on the front foot. The price broke the blue up trendline and came back above it. That is a last step for the proper false breakout pattern. Once we will close the day above that resistance, we will get a proper buy signal. Additional bullish factor here is that we are still inside the wedge pattern (black). Wedge is a trend continuation pattern and a main trend here is bullish. The breakout of the upper line of this formation, will be a confirmation of a buy signal.
The buy signal for the USD will be canceled, when the price will break the lows from the last month, chances for that are currently rather limited.
