US Dollar Index Price Analysis: Inverted Flag warrants a bearish impulsive wave, 105.00 eyed

• An Inverted Flag formation is advocating further downside in the DXY.
• Short-term EMAs have turned downside that signaling more weakness ahead.
• The RSI (14) is attempting to shift into the bearish range of 20.00-40.00.

The US dollar index (DXY) is struggling to defend the expectations of carry-forward pessimism. The asset remained extremely volatile on Thursday and ended the trading session on a weak note. The asset is oscillating around 106.60 but with a downside bias as per the broader context.

On an hourly scale, the DXY is forming an Inverted Flag chart pattern that results in a sheer downside move after a consolidation phase. Usually, a consolidation phase denotes the initiation of shorts by the market participants after a time pullback as it provides more conviction towards the downside.

The 20-and 50-period Exponential Moving Averages (EMAs) at 106.83 and 106.92 respectively have turned lower, which adds to the downside filters.

Also, the Relative Strength Index (RSI) (14) is attempting to shift into the bearish range of 20.00-40.00. An occurrence of the same will strengthen bears.

A decisive move below July 20 low at 106.37 will drag the asset towards July 1 high at 105.64, followed by the round-level support at 105.00.

On the flip side, bulls could regain strength if the asset oversteps Tuesday’s high at 107.62, which will send the DXY towards Monday’s high at 107.96. A breach of the latter will drive the asst to near July 13 high at 108.58.

DXY hourly chart