Dollar Index ignors the shooting star and tries to break the resistance again

The strength of the USD is the leading story in April, especially in the second half of the month. On many instruments, USD broke crucial mid-term supports/resistances, which triggered legitimate trading signals. That happened for example on the Kiwi or the Cable. Today, we will not deal with any pair. On our radar, we have the Dollar Index!

On Friday, the 27^th of April, DXY reached the 50% retracement of the downfall started at the beginning of November. That was also an area of the lows from the middle of September so, at least on the paper, that was a strong resistance. The price indeed respected that level and created a bearish shooting star pattern. It means that the high levels were rejected and traders started to take profits. The future sell signal depends on what will happen now. The price closing the next day above the head of the shooting star will cancel the bearish sentiment. The price closing below the bottom of the shooting star will trigger a sell signal.

As for now, buyers are making another attempt to break those levels. It shows us, that right now, the supply is rather weak. On the other hand, this level can be defended again and the two shooting stars in a row would be definitely a strong sell signal!

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis