USD Rebounds Show Technical Warning Signs, 98.90 May Become Key Support
Taylor Wilson
The dollar index hit a seven-week high then reversed sharply. RSI divergence, a hammer reversal candle, and a filled gap are flashing warnings in unison — a break below 98.90 would crack the consolidation range and open further downside.
Where did the rally reach — and why did it reverse?
The dollar index touched roughly a seven-week high this week, filling the price gap left by the April 7 low — a gap is a blank zone on a candlestick chart where the price "jumped" without trading — then fell back sharply.
This means → in technical analysis, filling an old gap sometimes marks the end of a rally, not the start of a new one — the bulls closed the blank they owed, and ran out of energy doing it.
According to Reuters analyst Christopher Romano, much of this rally was driven by safe-haven flows tied to the Iran conflict; that impulse has faded since April.
What are the three technical signals saying?
Signal one: bearish RSI divergence. The RSI — a gauge of the balance between buying and selling pressure — failed to make a new high alongside price → buying momentum is weakening, and the new high is hollow.
Signal two: inverted-hammer candle. Bulls briefly pushed prices higher but could not hold the gains; sellers retook control. In plain terms = the bulls charged once and got slapped back down.
Signal three: structural resistance zone. All three signals appeared near the 99.50–99.60 band, which LSEG data shows has generated selling pressure multiple times in the past. This reflects that the signals are not isolated — they lit up together at the same ceiling.
Which price levels matter next?
First line: 98.90. The index remains inside the consolidation range that began on May 15, with no confirmed downtrend yet. But a break below 98.90 would crack the range and open downside room.
Second line: 97.60–97.65. A decisive break below that level would invalidate the "inverse head-and-shoulders" bullish pattern — a chart formation that appears after a decline and, if completed, signals a reversal higher — currently taking shape.
This means → the first line decides "sideways or down"; the second decides "do the bulls have any last chance of a technical reversal" — the two levels carry entirely different stakes.
Content is for reference only, not financial advice.