DXY finds buyers at key support level
Dollar Index (DXY) Technical Analysis Report for Oct 23, 2020 | by Techniquant Editorial Team
DXY ended the week -1.07% lower at 92.710 after losing $0.265 (-0.29%) today. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (DXY as at Oct 23, 2020):
Friday's trading range has been $0.485 (0.52%), that's slightly above the last trading month's daily average range of $0.471. Weekly volatility is also higher, being above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for DXY.
Two candlestick patterns are matching today's price action, the Bearish Hikkake Pattern and the Black Candle which are both known as bearish patterns. The last time a Black Candle showed up on Wednesday, DXY actually gained 0.38% on the following trading day.
After trading down to 92.645 earlier during the day, the contract bounced off the key technical support level at 92.685 (S1). The failure to close below the support might increase that levels significance as support going forward. After having been unable to move lower than 92.610 in the prior session, the market found buyers again around the same price level today at 92.645.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Selling could accelerate should prices move below the close-by swing low at 92.460 where further sell stops might get triggered. With prices trading close to this year's low at 91.745, downside momentum could speed up should DXY break out to new lows for the year.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for Dollar Index. Out of 446 times, DXY closed higher 54.04% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 52.47% with an average market move of 0.13%.