The dollar highs for the week are $107.9 but the asset is currently trading at $105.7 around 200 pips down. The index has fallen 2% since the open on Monday as the dovish sentiment from the Fed is leading the market to price in less aggressive rate hikes going forward.
We are now bound to see a 50 basis point rate hike in December followed by a 25 basis point rate hike in February. This will cause a decline in the Dollar and investors will move their cash from the haven into more risk-on assets such as stocks and commodities.
Gold has been trading within a consolidation range forming a bearish flag pattern. The yellow metal hit $1727 on Wednesday post the data release but rejected that support line and is now ranging between $1750 – $1760. Gold is expected to be more bullish long-term as the Dollar selloff continues and the metal becomes a more attractive investment.
Bitcoin is green for the week and is currently trading higher than at the start of the week. The digital asset set lows of $15,400 and highs of $16,800 which is a considerably less volatile week in comparison to recent times. In the long term, we can expect more positivity out of bitcoin if no more surprises enter the market.
In today’s DIFX Analytics, we’re going to look into the following assets:
The Dollar Index may retrace and fall to $103
The Dollar Index is seeing some rejection at $105.6 and could retrace up. RSI is weak long-term and on an ever-falling downtrend, signaling bearish sentiment.
Traders may expect price action to rise short-term while more short positions are accumulated, putting downside pressure on the Dollar.
Traders should wait for RSI to go back up above 50 – 60 to signal the short. The resistance at $106.8 – $107.2 seems like a good area for traders to take action.
The next support level is $103.7.
Bitcoin is expecting more decline short term
Bitcoin recently broke out of an asymmetric triangle formation. The sentiment is bearish and we can expect negative price action following the breakout.
RSI is weak and reading below 50. The moving average seems to be aiming downward and we may see declines in the price in the near term.
Traders can pay attention to the Dollar and be advised that when the dollar goes up, bitcoin tends to fall.
Gold is consolidating in a bearish flag
Gold is currently consolidating in a flag formation. The flag pattern is bearish and should break to the downside.
We can expect the price to break out beneath the trend line on the chart. Once the breakout occurs, we can expect the asset to decline to at least $1741.
Traders should pay attention to when RSI falls below 50 on the hourly chart.
EUR/USD bearish divergence
EUR/USD is undergoing a bearish divergence from price action as the RSI set lower lows. The resistance at $1.0428 has been quite responsive to short positions in the past day as we have seen price reject this area.
In the short term, traders can expect bearish price action and the trend line to be broken to the downside.
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