Rising Wedge Into Major Supply | Bearish Reversal WatchUS Dollar IndexCAPITALCOM:DXYGForecastDXY — Rising Wedge Into Major Supply | Bearish Reversal Watch DXY is currently trading into an important higher-timeframe decision area after an extended recovery from the 2026 lows. From a structural perspective, price has been developing inside a rising wedge, with both trendlines converging while the index continues to print higher highs and higher lows. The latest bullish leg has now pushed DXY directly into the 101.905–102.639 resistance/supply zone, which also aligns closely with the upper boundary of the wedge. This creates an important confluence area where continuation becomes less attractive and reversal risk increases. Momentum is also beginning to confirm that view. RSI is currently near the upper part of its range and is forming a bearish divergence against price. While DXY has continued to push toward a new local high, RSI has failed to produce the same expansion in momentum. That divergence does not confirm a reversal by itself, but combined with: Major higher-timeframe resistance Upper wedge boundary Extended bullish displacement Bearish RSI divergence it creates a technically favorable environment for a corrective move lower. Primary Scenario — Bearish Reversal The preferred scenario is a rejection from the current 101.905–102.639 supply zone. The first important confirmation would be a failure to hold above the current resistance, followed by weakness back into the internal wedge structure. A stronger bearish confirmation would come from a decisive break and acceptance below the lower wedge trendline. That would indicate that the current bullish structure is no longer being maintained and that the move higher was likely a corrective expansion rather than the beginning of a new sustained bullish trend. If that breakdown develops, the main downside levels are: 98.304 — First major support and primary downside objective. 97.319 — Secondary structural support if selling pressure expands. 95.226 — Major higher-timeframe liquidity/support zone and deeper bearish target. The move toward 98.304 would represent the first meaningful structural correction. A clean loss of that level would materially increase the probability of continuation toward 97.319 and potentially 95.226. Alternative Scenario — Bullish Continuation The bearish view remains conditional. If DXY breaks above 102.639 with strong displacement and, more importantly, shows sustained acceptance above the current supply zone, the reversal thesis would weaken. In that case, the next major upside area becomes: 103.70–104.30 This is the next visible higher-timeframe resistance/supply zone and would become the natural upside objective if buyers successfully absorb the current resistance. A temporary spike above 102.639 would not be enough to invalidate the bearish setup. The key difference is between a liquidity sweep and genuine acceptance. A sweep above resistance followed by a quick return below the zone would actually strengthen the bearish case. Structural Bias The current bias remains bearish-to-neutral at resistance. The market is still structurally bullish inside the wedge, so there is no confirmed bearish trend reversal yet. However, the combination of wedge compression, major supply and weakening momentum suggests that the current area is more favorable for watching for distribution and downside confirmation than for chasing the existing bullish move. Confirmation Sequence Rejection from 101.905–102.639. Failure to extend above the wedge resistance. Loss of the internal bullish structure. Break and acceptance below the lower wedge trendline. Expansion toward 98.304. Invalidation Sustained acceptance above 102.639 would weaken the bearish thesis. A further breakout into 103.70–104.30 would confirm that buyers remain in control and that the rising wedge has resolved through continuation rather than reversal. Conclusion DXY is currently reaching one of the most important technical zones of the recent advance. The broader structure remains bullish, but the index is now testing major supply while momentum is showing a clear bearish divergence. For that reason, the preferred outlook is a potential bearish correction, but only after structural confirmation. As long as price continues to reject the 101.905–102.639 region, downside risk toward 98.304 remains the primary scenario. The key signal to watch is not simply resistance rejection, but whether DXY can lose and accept below the rising wedge support. That would provide the clearest confirmation that the current bullish phase is transitioning into a broader corrective move.