{"id":56279,"date":"2022-02-07T11:10:04","date_gmt":"2022-02-07T16:10:04","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=56279"},"modified":"2022-02-07T11:10:04","modified_gmt":"2022-02-07T16:10:04","slug":"dollar-fades-after-hitting-the-target","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2022\/02\/dollar-fades-after-hitting-the-target\/","title":{"rendered":"Dollar Fades After Hitting The Target"},"content":{"rendered":"

Last December, in the post titled \"Is The Dollar Going To Steal The Santa Claus Rally?\" <\/a> I had shown you how a well-known \u201cDouble Bottom pattern\u201d had been emerging in the daily chart<\/a>. According to your voting, most of you have spotted that model as well.<\/p>\n

I put the updated chart below to show you the path of the price on its way to the target. <\/p>\n

\"Dollar<\/a><\/p>\n

The dollar index (DX)<\/a><\/strong> has tried to climb over the previous top right after the post. This promising attempt has failed (red X), turning into the deeper complex consolidation (red down arrow). The good thing from a technical point of view was that the price has remained above the Neckline, although the depth of correction was scary.<\/p>\n

The hawkish Fed supported the reversal and the further final run to the upside to hit the target of the pattern at $97.38. It is amazing how the price accurately broke into the aimed area at $97.44 and then collapsed right after.<\/p>\n

The RSI has not confirmed the new higher top showing the Bearish Divergence. However, this distortion has played out instantly as the price has collapsed almost in the area of earlier deep consolidation. <\/p>\n

What is the next? Your medium-term and long-term outlooks were mixed as you have chosen a Bearish path for former and Conservatively Bullish for a longer distance. <\/p>\n

Let me share with you my outlook in the next chart below.<\/p>\n

\"Dollar<\/a><\/p>\n

The dollar index saw profit-taking selling pressure last week on the news that the European Central bank (euro, the largest component of DX) could lift its policy rate earlier than stated before, possibly in the last quarter this year. Moreover, the Bank of England (GBP, the third largest part of DX) last week raised the base rate by 25 basis points to 0.5%.<\/p>\n

The dollar index (DX)<\/a><\/strong> has breached the orange uptrend. I added the Fibonacci retracement area (red) between $94.42 (38.2%) and $92.56 (61.8%) to watch the depth of the current correction. <\/p>\n

Buy rumors sell facts; the news mentioned above will pressure the dollar index for a short period. Nevertheless, let us not forget that some analysts think of more hikes from the Fed (up to five), which could lift the comparative attractiveness of dollar-denominated assets in the medium term.<\/p>\n

In this regard, I take the scenario<\/a> of triangular consolidation as primary. It was shown initially in distant September of 2020. I assume that after retracement, we will see a renewed demand for the dollar. This should push the price beyond the triangle's resistance (black). The former top of $97.44 would be a critical point of the pattern's breakout confirmation. There are no other barriers on its way to the upside until we hit the $103 handle. <\/p>\n

Those readers who keep the bearish stance on the dollar index (DX)<\/a><\/strong> should watch the breakdown of the long-term trendline support (red dashed) below $90.7 as the first alert. The final confirmation comes with the collapse of the price below $89.21; the valley was established last January. <\/p>\n

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Where do you think the Dollar will go next?<\/strong><\/p>