RSI Divergence is something that can NOT be spotted easily and they can be a strong potential warning sign of the possible reversal that might be coming!. Its importance is directly proportional with increasing time frame.
Looking at the above text book classic scenario for the DOLLAR INDEX or DXY, the price has been diverging from the 14 day RSI. The EMA 50 is acting as a potential dynamic support. Its a great warning sign of whats to come. EMA 50 can act as a strong dynamic support and resistance, a possible break and close below the 50 EMA would spark a potential move to the downside.
A possible break to the downside would mean the weakness of the USD and all the USD pairs especially the EURUSD would face significant movement.
DXY is a great tool and it can add to the further list of confluence factors to trade all the major USD related pairs.
Looking at the above text book classic scenario for the DOLLAR INDEX or DXY, the price has been diverging from the 14 day RSI. The EMA 50 is acting as a potential dynamic support. Its a great warning sign of whats to come. EMA 50 can act as a strong dynamic support and resistance, a possible break and close below the 50 EMA would spark a potential move to the downside.
A possible break to the downside would mean the weakness of the USD and all the USD pairs especially the EURUSD would face significant movement.
DXY is a great tool and it can add to the further list of confluence factors to trade all the major USD related pairs.
