Weekly shooting star and bull-trap generate initial reversal signal
The dollar index is holding in ire for the third straight day and extending pullback from new multi-month high at 96.92.
Bears gained control after the news that new variant of coronavirus was detected last Friday, with narrower range on Monday preceding fresh acceleration lower on Tuesday.
Key supports at 95.52/43 (Fibo 38.2% of 93.24/96.92 / rising 20DMA) are under pressure, with break here to further weaken the structure.
Strong bearish signal is developing on weekly chart as last week’s action ended in a shooting star candlestick, while bears were trapped above 96.78 (50% retracement of 103.80/89.15 downtrend) and subsequent weakness on Mon/Tue adds to the strength of the signal.
Break of 95.52/43 pivots would risk deeper pullback towards 94.75 (200WMA) violation of which would generate initial signal that dollar’s larger uptrend might be coming to an end.
Res: 95.99; 96.21; 96.47; 96.92
Sup: 95.43; 95.08; 94.75; 94.36