Divergence Watch on USD Index

February 20, 2023
by Joseph Jeffriess, Market Analyst

USD Index has Formed Divergence.

In today’s analysis, we have reviewed the divergence pattern in U.S. Dollar Index (DXY) and Friday’s price action, which might give it more substance. From here, we would like to see a new move by sellers that breaks last Friday’s low, and this could confirm that sellers are in control and could look to take the price back down to the moving averages.

Looking at the daily chart, we can see a familiar pattern forming between the price and the 10 CCI. This pattern is called regular divergence, indicating that a possible reversal could develop.

If sellers manage to reach 103, it may offer some resistance, as it was a previous level of consolidation before the last breakout. Focus now will be on sellers and if they can back up Friday’s move with a new push lower.

The US has a bank holiday today, which could also be another factor that affects short-term volatility.

Please see our analysis video and chart below.

USD Index D1 Chart

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