Initially I was under the impression that the DXY was developing an Inverse Head And Shoulders Formation. But the last day(s), makes me question that assumption. I am currently looking at:
1) Rejection from the yellow trendline 2) RSI bearish divergence on the 4H and 1D
Awaiting to see how strong the yellow trendline resistance is or if a break will develop into a bullish momentum.
On the 4H, the Bearish Divergence is clearer:
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Double bearish divergence:
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DXY needs to create hidden Bullish divergence to create the possibility for higher high:
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Very possible Cup and Handle formation within the flag. If the C&H plays out, the higher timeframe Inverse Head and Shoulders might break the neckline:
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Awaiting to see the reaction at the support:
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A drop below 92 would represent a lower low.
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CPI Data
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After CPI Data:
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After the CPI data release and analysing the 1D there is the possibility for a RSI bearish divergence.
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In case DXY moves above the 93.3 there is the possibility to reach the Inverse Head and Shoulders target.
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Daily RSI Bearish Divergence seems to be confirmed but looking at the 93 level as the possibility of a higher high on the RSI (meaning that this divergence is no longer valid)
@pedrogarrinhas, I'm not disagreeing since u have a bear scenario as well, but your bull scenario is way to extended I think. Maybe long term half a year to a year yes but otherwise I dont see it happening soon
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@bassmechobass, I might have been not that clear on the description of this analysis.
I was initially bullish and on the watch for some kind of Inverse Head and Shoulders playing out.
But I changed my biased from bullish to Bearish after the:
1) Rejection at the trendline (neckline from the Inverse Head and Shoulders)
2) Bearish Div
3) Last daily candle (02.07.2021) bearish engulfing