Português
Español
Français
русский
The US dollar index sold-off broadly last week after the United States Michigan Consumer Sentiment survey came in at its weakest since September 2011, which shocked the market to say the least.
Traders and investors significantly pulled back on expectations that the Federal Reserve is going to start to taper. In basic terms, the FED watch consumer sentiment as the economy is primarily drive by consumer spending.
Sentiment shifts also took place in not just the data, a massive shift was seen amongst the retail trading crowd, with the ActivTrader platform showing that some 96 percent of traders were turning bearish towards the buck.
On the technical front, red flags are everywhere. A bearish triple-top pattern formation looks to have formed, which is typically considered to be one of the most bearish reversal patterns.
Coincidently, the EURUSD pair has formed a bullish triple-bottom price pattern. With both those dynamics in play it seems that more losses for the US dollar index seems likely.
As mentioned earlier the ActivTrader market sentiment tool is also showing that a big shift has taken place in sentiment. The way that traders view the US dollar appears to have shifted dramatically.
Typically, one-way sentiments skews are worrying, and we should bare this mind, however, with the short-term technical and fundamentals aligning I would expect more weakness.
US Dollar Index short-term Technical Analysis
Looking at the four-hour time frame a head and shoulders patterns looks to be playing to the downside after the 93.20 level held firm last week to complete the structure to the pattern.
This week, if bears can break the 91.20 support level then the US dollar index could tumble hard towards the 89.00 area, so do be careful trying to long the US dollar.
See real-time quotes provided by our partner.
US Dollar Index Medium-term Technical Analysis
According to the daily time frame a much larger head shoulders pattern is in play and looks to be warming up. It should also be noted that a bearish triple-top pattern can also be seen.
Furthermore, bearish price divergence has also formed during on the MACD Relative Strength Index and also the CCI indicator, which warns of a big pullback if the head and shoulders is not invalidated soon.
See real-time quotes provided by our partner.
