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Dollar reversal incoming, Gold losing strength, EURUSD displays bearish signals

The dollar is expressing bearish signals in all areas of the market as displayed in the sentiment of Gold and EURUSD. We have seen technicals begin to lose strength in Gold which indicates a reversal is upon us.

The daily and 4-hour charts are showing clear signs of downside momentum gaining on the precious metal. EUR/USD has seen the bullish trend break on 4-hour RSI as the triangle breakout occurred in a bearish fashion.

This week, we have inflation data toward the end of the week as Core PCE Price Index (MoM) comes out on Friday. The forecast is 0.2%, traders should keep an eye out as this could bring the volume to activate the reversal.

GDP comes out this Thursday yet its quarterly data, meaning it is not a short-term indicator of the current growth within the economy. Analysts usually don’t expect a significant reaction to this data.

Initial Jobless Claims, which comes out every Thursday, will be a more up-to-date figure to state the nature of current growth in the US economy. This is a great time for traders to restructure their positions and prepare for a dollar long trade in FX majors and Gold.

The catalyst to initiate the confirmation of this reversal in the Dollar will come from one of the fundamental data releases so traders should look to the support and resistance levels indicated on the charts in order to line up trades to capture entries.

In today’s DIFX Analytics, we’re going to look into the following assets:

Are we beginning to see a Dollar reversal?

The Dollar is beginning to show signs of a reversal. We have seen the daily chart set a new high on RSI even as price action sets lower lows.

The 4-hour chart is showing signs of gaining momentum as we saw the RSI trend broken to the upside as indicated on the yellow dotted line.

We can expect the price to test the support and accumulate long positions so it can gain strength to push for confirmation in the reversal.

Bitcoin breaks bullish trend

Bitcoin has broken the trend to the downside after a bullish trend. We saw gains in Bitcoin since the FTX crash up until the asset hit $18,300 levels. The rejection was significant but can also be attributed to the hawkish sentiment from the Fed which sent rattles throughout the market.

We have seen some gains today and the RSI has bounced off the 30 levels. Traders should watch these trend lines as guidance on entries and exits for positions.

EUR/USD short indicators lining up

The currency pair is beginning to display short signals as the inverse correlation with the Dollar is as strong as ever.

We saw the asymmetric triangle in RSI broken to the downside as the initial indicator of a reversal in the trend.

We can expect the 50-day EMA on the 4-hour in price action broken to the downside and price action will test the 100-day EMA on the 4-hour chart.

Once the 50-day and 100-day EMA indicators begin to converge this will be the confirmation of a reversal in the trend.

Traders should keep an eye on $1.062 – $1.065 levels.

Gold initial short signals

Gold is now seeing a slight reversal in trend as the 4-hour RSI trend was broken to the downside.

As it has an inverse correlation to the Dollar, we see the techincials lining up in the opposite direction as confirmation of an incoming reversal.

Price action has also broken the trend to the downside as the initial signal. Traders should wait for a test at resistance before entering a short position in the asset.

We see price action touching $1805 – $1810 as it builds short positions before confirmation of the downside play.

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Trading Disclaimer

DIFX shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee, or implication by DIFX that the forecast information will eventuate, that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses in particular if the conditions or assumptions used for the forecast or mentioned in the analysis do not eventuate as anticipated and the forecast is not realized.

 

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