Institutional Insights: CitiFX Techs - Potential for a Tactical Dollar Rally
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CitiFX Techs - Potential for a Tactical Dollar Rally
There appears to be potential for a further tactical increase in the DXY, even after last night's rally. The signal we identified two weeks ago, involving a crossover in weekly momentum, suggests the DXY could reach at least 103. Additionally, a move towards the 200-day moving average (MA) at 104.27 is also possible.
Previously, we cautioned that the crossover in weekly slow stochastics has historically been a bullish indicator for the DXY. This crossover in oversold territory has led to upticks of more than 3% on all six occasions since 2020, and on seven out of nine occasions in the past decade, with the exceptions occurring in 2017.
This signal indicates there is further potential for a dollar uptick, possibly another 2% from current levels. A 3% rally would suggest a move towards approximately 103 at a minimum. However, considering historical trends, such crossovers have typically resulted in rallies of around 5%.
We anticipate initial resistance at 102.29 (55-day MA), with stronger resistance at 104.27-104.40 (200-day MA, 55-week MA), which aligns with the 5% increase mentioned earlier.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!