We start this week off with an analysis of the US dollar index, which has created a major buy signal over the last week, and it seems that this positive movement will continue through the end of October, and perhaps even the beginning of November.
The DXY has been on the rise since mid-September. In that time, the index has managed to create an inverse Head & Shoulders pattern. On Thursday, we managed to break the neckline of this formation (red) along with the horizontal resistance (yellow). This movement was confirmed on Friday as this area was used as a support. The DXY has started the week on the front foot, and as long as we stay above the yellow area, we have a buy signal.
The iH&S formation mentioned above is a part (the right shoulder) of the bigger iH&S pattern made on the daily and weekly charts. The second one started in July 2017, although we’re still too far away from the neckline to claim a buy signal here. It’s a good idea to keep this in mind, however. With this pattern, we can aim much higher, with the highs from 2016 as our next target.