The dollar index continued to slide lower within a corrective pattern yesterday. Prices are testing important support levels both in the short and longer term. As shown in the first chart below, the decline from 81,50 is far from impulsive. This means that this counter move to the upward impulsive wave from 79 is just a correction and an uptrend should resume once over.
Prices are trading withing the blue downward sloping channel. Breaking above it would be a first bullish sign. This will happen if wee see the index above the MA and the upper channel boundaries at 80,95. Support is found at 80,50 and it will not be good for bulls if this support breaks and prices close below it. However, on intraday scale, we could allow for a dip below that level, only to wait a pull back up above that support.
On the daily chart the prices are testing the lower boundaries of the triangle. The MA support is not reached yet. The triangle is now being tested and, as we noted yesterday, we should take positions favoring the levels we are near. So now that we are near support, we should go long with that support as stop loss. So long at 80,59 with 80,45 stop is a fair trade with a good risk reward ratio. Our target to sell would be the upper triangle boundaries.
The material has been provided by InstaForex Company - www.instaforex.com
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