{"id":8697,"date":"2025-02-17T11:54:02","date_gmt":"2025-02-17T11:54:02","guid":{"rendered":"https:\/\/alchemymarkets.com\/?post_type=market_insights&p=8697"},"modified":"2025-05-12T09:34:12","modified_gmt":"2025-05-12T09:34:12","slug":"dxy-momentums-as-wave-3-breakdown","status":"publish","type":"market_insights","link":"https:\/\/alchemymarkets.com\/it\/education\/market-insights\/chart-of-the-day\/dxy-momentums-as-wave-3-breakdown\/","title":{"rendered":"DXY Dollar Index: Bearish Momentum Strengthens as Wave (3) Awaits Breakdown"},"content":{"rendered":"\n

DXY Outlook: Bearish Bias as Key Support Levels Face Pressure<\/strong><\/h3>\n\n\n\n

The US Dollar Index (DXY)<\/strong> continues to weaken, with price action now testing the lower bounds of its descending channel. After a 3% decline from its early January highs<\/strong>, the dollar\u2019s momentum appears to be fading, and the technical picture suggests further downside movement could be on the horizon.<\/p>\n\n\n\n

A key factor in this outlook is the potential breakdown from the current channel<\/strong>, which could confirm the start of an Elliott Wave Theory<\/a> Wave (3) to the downside<\/strong>. This bearish setup is reinforced by a combination of technical indicators<\/strong> that signal further weakness, although some long-term support levels remain in play.<\/p>\n\n\n\n

\n\n\n\n

Bearish Signals Align for Further Downside Move<\/strong><\/h2>\n\n\n\n
\"\"<\/figure>\n\n\n\n

Several technical indicators<\/strong> confirm the growing bearish outlook:<\/p>\n\n\n\n

1. RSI Shows Bearish Travelling Pattern<\/strong><\/h3>\n\n\n\n

The Relative Strength Index (RSI)<\/a><\/strong> is trending lower, currently sitting at 41.85<\/strong>, well below the key 50 neutral level. A declining RSI without significant rebounds suggests that selling pressure remains dominant<\/strong>. Additionally, RSI still has more room to the downside<\/strong>, meaning sellers have not yet exhausted momentum.<\/p>\n\n\n\n

2. MACD Confirms Bearish Momentum<\/strong><\/h3>\n\n\n\n

The Moving Average Convergence Divergence (MACD<\/a>)<\/strong> indicator also supports the bearish thesis. The MACD line has crossed below the signal line, a strong sell signal<\/strong>, and the histogram is expanding in negative territory<\/strong>, reflecting growing downside momentum. Given that MACD still has room to fall<\/strong>, this adds weight to the argument that the dollar’s decline is far from over.<\/p>\n\n\n\n

\n\n\n\n

Key Moving Averages and Structural Support Levels<\/strong><\/h2>\n\n\n\n

Although the technical indicators<\/strong> suggest a bearish continuation, the DXY still faces a few obstacles before fully breaking down<\/strong>.<\/p>\n\n\n\n

1. Below the 20-day and 60-day Moving Averages<\/strong><\/h3>\n\n\n\n

The price is currently well below the 20-day and 60-day moving averages<\/strong>, which represent the last monthly and quarterly trading averages<\/strong>. This means that short-term momentum has decisively shifted bearish, as buyers have struggled to regain control in recent weeks.<\/p>\n\n\n\n

2. 120-day and 250-day Moving Averages as Key Barriers<\/strong><\/h3>\n\n\n\n

However, the 120-day and 250-day moving averages<\/strong> remain in play and could provide potential support<\/strong>. These moving averages are crucial because they represent:<\/p>\n\n\n\n

    \n
  • 120-day MA<\/strong> \u2192 Approximately six months<\/strong> of trading data.<\/li>\n\n\n\n
  • 250-day MA<\/strong> \u2192 Roughly one year<\/strong> of trading history.<\/li>\n<\/ul>\n\n\n\n

    These levels are significant as they track broader institutional trends<\/strong>, reflecting the longer-term market sentiment<\/strong>. If the DXY fails to break below these key averages<\/strong>, it could delay the bearish outlook. But if sellers push through, we could see a much deeper decline.<\/p>\n\n\n\n

    \n\n\n\n

    Wave (3) Setup and Potential Price Target<\/strong><\/h2>\n\n\n\n

    Given the overall technical picture, the most probable scenario<\/strong> is a continuation into Wave (3) to the downside<\/strong>. A breakdown from the current structure could see DXY heading lower, possibly towards the 104\u2013105 region<\/strong> in the coming weeks.<\/p>\n\n\n\n

    This bearish wave aligns with:<\/p>\n\n\n\n

      \n
    • The failure to hold above key support levels<\/strong>.<\/li>\n\n\n\n
    • Momentum indicators (RSI and MACD) still having room to decline<\/strong>.<\/li>\n\n\n\n
    • Ongoing economic uncertainties<\/strong> and shifts in US trade policies that could further weaken the dollar.<\/li>\n<\/ul>\n\n\n\n
      \n\n\n\n

      Final Thoughts: Downside Bias but Watch Key Moving Averages<\/strong><\/h2>\n\n\n\n

      While the US Dollar Index (DXY)<\/strong> appears primed for a breakdown into Wave (3)<\/strong>, traders should watch how price reacts to the 120-day and 250-day moving averages<\/strong>. A clean break below these longer-term averages could accelerate the bearish move<\/strong>, but if these levels hold, a temporary relief bounce could occur.<\/p>\n\n\n\n

      For now, the bearish case remains dominant<\/strong>, and as long as the dollar remains below the 20-day and 60-day moving averages<\/strong>, the downside pressure will likely persist.<\/p>\n","protected":false},"excerpt":{"rendered":"

      The US Dollar Index (DXY) is poised for a bearish breakdown into Wave (3) as technical indicators signal further downside momentum.<\/p>\n","protected":false},"author":162,"featured_media":8700,"parent":0,"comment_status":"open","ping_status":"closed","template":"","market_insights_categories":[18],"class_list":["post-8697","market_insights","type-market_insights","status-publish","has-post-thumbnail","hentry","market_insights_categories-chart-of-the-day"],"acf":[],"yoast_head":"\nDXY Dollar Index: Bearish Momentum Strengthens as Wave (3) Awaits Breakdown - Alchemy Markets<\/title>\n<meta name=\"description\" content=\"The DXY dollar index is facing increased bearish pressure, with RSI and MACD confirming downside momentum. Will the 120-day and 250-day moving averages hold, or is a deeper decline ahead? 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