As mentioned in our previous analysis, the Dollar Index was moving upwards in an overlapping pattern implying that it was still in a corrective upward move. More downside was expected towards the 61.8% Fibonacci retracement at the 82.10 price level. Resistance at 83 was not possible to overcome. Prices got rejected and moved lower towards 82.52. The dollar index still trades in a corrective pattern and we continue to believe that the downward correction from 84.75 is not over yet.
Prices are hovering above the 50% retracement and give no sign yet of any upward break or an impulsive upward move at its beginning. Price structure remains vague and the overlapping pattern does not give bulls any chance for immediate rise in prices. 83.45 is an important pivot point for intermediate term trend. 82.45 is support and if broken, prices are expected to go towards our initial target of 82.10.
The hourly chart as shown above shows clearly the sideways trading channel the index currently moves in. We are neutral at this stage waiting for prices to continue lower towards 82.10 to end the downward correction. Upward break above 83.45 could signal that the bottom is in, but we should also take a good look at the price formation. If prices move upwards in an impulsive way an break the upper boundaries of the channel, then we will look for long positions. Otherwise we will wait to enter long near 82.10.
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