The Dollar Index continues to trade sideways above 81.00 but there is no clear upward impulsive move and buyers seem weak in order to break resistance levels. Taking into consideration the previous downward trend and the current sideways consolidation, a bearish flag pattern is being formed.
The 81.00 price level is expected to break downwards and give most probably a new low towards 80.90 where the recent low at 80.86 will be tested. If however prices break above 81.45 we will change our view to bullish once again. As always we give importance to support and resistance levels. Even if a level is not broken, it gives us an equally important signal as when it is broken. Inability to break a price level means weakness and rejection. This in turn means that prices will move the other way.
Support is found at 80.90 and 80.86. Resistance at 81.45. We prefer to be neutral or bearish as long as prices trade below 81.45. If resistance breaks we could go long with 81.80 target. Next resistance at 82.00 and 82.50. On the daily chart trend remains down as lower highs and probably a new lower low keep trend in favor of bears. If the blue support trend line is broken, then the longer term bullish scenario will be challenged. If the downward sloping blue trend line is broken upwards we coulld see a test of the MA region at 82.40.
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