DXY finds buyers around 92.185 for the forth day in a row
Dollar Index (DXY) Technical Analysis Report for Nov 20, 2020 | by Techniquant Editorial Team
DXY finished the week -0.36% lower at 92.385 after gaining $0.065 (0.07%) today. Trading up to $0.145 lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. 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 Nov 20, 2020):
Friday's trading range has been $0.240 (0.26%), that's far below the last trading month's daily average range of $0.540. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for DXY.
One bullish candlestick pattern matches today's price action, the Hammer. The last time a Hammer showed up on September 1st, DXY gained 0.35% on the following trading day.
After trading down to 92.185 earlier during the day, the contract bounced off the key technical support level at 92.195 (S1). The failure to close below the support could increase that levels importance as support going forward. Prices are trading close to the key technical resistance level at 92.685 (R1). DXY was bought again around 92.185 after having seen lows at 92.225, 92.195 and 92.250 in the last three trading sessions. Obviously there is something going on at that level.
Although the market is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Buying could accelerate should prices move above the close-by swing high at 92.720 where further buy stops might get triggered. With prices trading close to this year's low at 91.745, downside momentum could speed up should the contract break out to new lows for the year. As prices are trading close to November's low at 92.120, downside momentum might accelerate should DXY mark new lows for the month.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Low close to prior three Lows" stand out. Its common bullish interpretation has been confirmed for Dollar Index. Out of 23 times, DXY closed higher 56.52% 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 73.91% with an average market move of 0.59%.