Markets on Wednesday: Dollar Bounces, But Markets Tumble

Just when investors thought there was about to be some relief in sight, stocks took another big hit. On Monday the S&P 500 bounced right off the 200-SMA that I spoke about yesterday. However, the rally was short-lived and price gave way on Tuesday.

As it stands we are really sitting on a knife edge as if we break down below the 200, we could well see a big correction in stocks.

As the USD rallied the majors felt the heat. The Aussie in particular performed poorly posting further losses as did the Euro.

Bitcoin is still struggling with overhead resistance and remains around the 8,000 mark.

Round Numbers

The DXY traded lower early on and bounced perfectly off 89.00. The DXY loves to test the round number levels and does so more often than not.

I’m still focused on the downside level of 88.50, which is a big support level, before I think we’ll see much more upside.

The short-term trend is certainly pointing towards further downside.

US Dollar Index (DXY)- 240 min Chart.