After the occurrence of whipsaws at peaks of the uptrend in DXY (US dollar index), price declines began to show bearish effects of this pattern (see for whipsaws shown in the rectangular shaped area).
Gap down opening: after yesterday’s bearish candle with a big real body, bears continued dragging dips by opening trades at 102.13 comparing with the previous close at 102.65. It has slid upto 102.02 (day lows so far) where it has tested support at 21DMA to bounce back again.
Channel baseline breach: As you could see current price upswings have been evidencing through rising channel but for now, it has broken channel support by forming above mentioned gap down opening. The sustenance below is likely to extend declines upto next immediate supports 101.75 and even upto 100.71 levels.
Both leading indicators evidence bearish convergence: RSI has been trending downwards right from 70 levels (which is overbought territory). Same is the case with stochastics, signals intensified momentum.
MACD also signals further slumps with its bearish crossover.
Hence, with advise staying shorts in DXY 101.75 and 100.71 levels with strict stop loss of 102.904 levels.
