Possible hammer on the Dollar Index

The Dollar has been under a tremendous pressure due to different factors like hurricane Harvey, the Jackson Hole meeting, and the rising tensions between the United States and North Korea. The bearish momentum has taken the Dollar index to a low at the 91.51 level and the stochastics indicator has fallen below the oversold area at the 20% zone. At the same time, the 55 day EMA (purple line), keeps a good angle of inclination to the downside, indicating that the bearish trend is still strong. However, during this Tuesday’s session the stochastics indicator line has crossed above its signal line, indicating a possible trend correction. Additionally, Tuesday’s daily candle has closed in the shape of a “hammer”. The hammer is a bullish reversal candlestick pattern and if the next candle is positive, then it could be confirming a further correction on the Dollar index. None the less, we must keep in mind that the 93.00 level could act as resistance due to the fact that it was a good support in the past. Above the 93.00 level, the index would be entering a consolidation zone between that level and the 94.00 level, which has acted as a good resistance.