The Dollar index has broken its short-term support at 80.15-20 and has now moved below 80. The index continues to trade within the downward sloping trend channel and continues to make lower lows and lower highs. However, the index is oversold and we believe that a strong upward bounce should be expected soon.
Short-term resistance is found at 80.20 and short-term support is found at 79.95. The index is very possible to rise towards the upper channel boundaries to test the downward trend. Although the index has broken below the upward sloping black trend line, it has found support over the previous lows and the horizontal support they provide. This can be seen clearer in the daily chart below.
The two purple horizontal trend lines are important support levels from last Decemeber. We expect and upward bounce to come from these levels. A move towards 80,40-60 could be justified. However, this is important resistance area and it will be very dofficult for bulls to break above this level. For now, all time frames point downwards. The oversold conditions justify a bounce and we are expecting an upward move soon.
The material has been provided by InstaForex Company - www.instaforex.com
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