The Dollar index has broken below the Ichimoku cloud support and is showing bearish signs of exiting the neutral sideways trading range of last few days. This downward breakdown is expected to bring the index back near 79 important support level. The short-term chart is very bearish. Specially if support at 79.30 is broken, we should expect heavy selling pressures that could push the index towards 78. We warned last week that the rejectiong at the 50% retracement was not a good sign for bulls.
The Ichimoku cloud support is now above current price although we should let the rest of the day unfold as it is still too early. The initial signs are bearish and favorable of a downward move to test 79.20-.30 lows.
The daily chart only comes to confirm why trend is down. Price is below Ichimoku cloud and resistance trend line. The multiple rejection at the trend line and at the Ichimoku cloud is not faovrable for the long-term. The index could accelerate lower towards 75-76 in the next couple of months if price remains below 80.70. So this price level could be used as a stop. Breaking above 80.70 wll increase the chances of a trend reversal.
The material has been provided by InstaForex Company - www.instaforex.com
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