DXY pushes through key technical resistance level

Dollar Index (DXY) Technical Analysis Report for Oct 26, 2020 | by Techniquant Editorial Team


DXY pushes through key technical resistance level
DXY dominated by bulls lifting the market higher throughout the day
DXY runs into sellers again around 93.110
DXY stuck within tight trading range
DXY closes within previous day's range after lackluster session


DXY finished Monday at 93.045 gaining $0.335 (0.36%) on low volume. The bulls were in full control today, moving the market higher throughout the whole session. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range in a lackluster session.

Daily Candlestick Chart (DXY as at Oct 26, 2020):

Daily technical analysis candlestick chart for Dollar Index (DXY) as at Oct 26, 2020

Monday's trading range has been $0.380 (0.41%), that's below the last trading month's daily average range of $0.465. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for DXY. Prices continued to consolidate within a tight trading range between 92.610 and 93.130 where it has been caught now for the last three trading days.

During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar. Additionally, two candlestick patterns are matching today's price action, the Bullish Short Candle and the White Candle which are both known as bullish patterns.

Buyers managed to take out the key technical resistance level at 92.790 (now S1), which is likely to act as support going forward. After having been unable to move above 93.130 in the previous session, the contract ran into sellers again around the same price level today, failing to move higher than 93.110. The last time this happened on October 22nd, DXY lost -0.29% on the following trading day.

The market shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.

Buying might speed up should prices move above the nearby swing high at 93.130 where further buy stops could get triggered.

Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "High close to prior High" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Dollar Index. Out of 626 times, DXY closed higher 50.48% 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 53.04% with an average market move of 0.15%.

Market Conditions for DXY as at Oct 26, 2020

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