DXY Potential Reversal from Key Support | Buy Setup

The U.S. Dollar Index (DXY) has formed a Head and Shoulders pattern on the 4-hour timeframe, signaling a potential bearish trend. After breaking the neckline, DXY has dropped significantly and is now approaching a major demand zone (103.50-104.00), where buying pressure could emerge.

Key levels to watch:

Support Zones: 103.50 - 104.00 (Strong demand area)
Resistance Zones: 105.50 - 106.50 (Previous support turned resistance)
Trade Idea:
Entry: Around 103.50 - 104.00
Target: 106.00 - 106.50
Stop Loss: Below 103.00 (to avoid further downside risk)
Risk-to-Reward Ratio: 1:3
Impact on Forex Pairs:
If DXY moves up, currency pairs with USD as the base currency (e.g., USD/JPY, USD/CAD, USD/CHF) will likely move higher. On the other hand, pairs where USD is the quote currency (e.g., EUR/USD, GBP/USD, AUD/USD) will likely move lower as the dollar strengthens.

Conclusion:
If price holds at the 103.50-104.00 support, we may see a short-term bullish move towards 106.00-106.50. However, a break below 103.00 could lead to further downside pressure. Traders should also monitor major USD pairs for potential trade opportunities.