Gold bulls eyeing key DXY support

Gold bulls eyeing key DXY support

DXY-support

Over the past two weeks, the US Dollar currency Index (DXY) has broken through major daily and weekly support levels and is now testing the big one, monthly horizontal and rising channel (1) support at (2). The broader long term outlook is still looking bullish at this stage and will continue to do so providing the DXY stays within its multi-year rising channel. We can expect to see some relief at these levels from the relentless decline of late, but we’ll have to wait and see whether or not it will be enough to kick start a reversal. 

A break and close on the weekly time frame below support at (2) would most likely result in another leg down for the short-medium term with 8870s in focus, whilst sending a strong bullish message, in particular, to the precious metals traders.