The US Dollar Index (DXY) consolidated recent gains in an otherwise non-eventful day. Overbought daily conditions along with bearish diverging hourly studies triggered a slight pullback that has marked a daily harami (inside day). While this suggests that dollar bulls have taken a breather, only a sustained loss of 50-hour moving average support would indicate that a deeper correction is in store. This would likely imply a retest of the double bottom neckline and the key 50-day moving average above the 78 region. Meanwhile, the next upside hurdle comes in the form of the 50% retracement at 79.587.
The EUR/USD found support near the 50% retracement zone off the August lows. Oversold conditions and bullish diverging hourly studies triggered a small 2-day double bottom base. This hints of a possible re-test of the 100-hour moving average, which has capped rallies over the past few days. Further strength would then target the mid 1.36 region, where several key retracement levels overlap. Meanwhile, the short-term structure is quite bearish while price-action remains capped below Friday’s swing low at 1.3575.
The USD/JPY backed off a bit, breaking (down) out of a 2-day consolidation triangle pattern in early North American trade. This has potentially left a daily tweezer top formation to hint of a near-term pullback or further consolidation. Meanwhile, while price-action remains above the previously resistant 50-day moving average, the outlook is for an upward move to the upper 84 region.
The S&P 500 has already met my correction target zone at 1175/1180 region. The current 4th wave correction is now a Fibonacci (61.8%) proportion of the previous 2nd wave correction. While oversold daily conditions could limit further weakness, reclaiming the 14-day moving average at 1200 is now required to shift the near-term focus higher.
GOLD finally lost 30-day moving average support to neutralize the medium-term outlook. Longer-term bulls should take notice of the daily (9-period) RSI. This key oscillator is now nearing oversold conditions near the 30 region, which is a level that has supported previous rebounds over the last year. Meanwhile, if the 50-day moving average fails to provide support, then focus shifts to the Fibonacci retracement at 1324
