The Dollar index has broken below short-term support at 79.50 and is heading lower towards its lows at 79.20. In previous posts we mentioned that short positions were preferred at current levels than long ones. The trend is down also in the short term as the price has fallen below the Ichimoku cloud and continues to make lower lows and lower highs.
As long as the Dollar index remains below the Ichimoku cloud trend will remain bearish. There is increased probability that the index will continue lower below the 79.20 low and break the blue support area. This will be another sell signal with 78.50 as a short-term target. Resistance is found at 79.75-.85. However bears should not be overconfident as the area below 79.20 has very important long-term support levels.
The weekly chart above shows where the important long-term support levels are found. The dashed red lines are this support. Breaking below 78 will signal more weakness to come with very possible target the 75-76 area. Longer-term trend remains down. For this to change, the index should first break the blue downward sloping trend line and then break above the Ichimoku cloud at 81.50. As long as the price is below the Ichimoku cloud in the weekly level, bears will have the upper hand.
The material has been provided by InstaForex Company - www.instaforex.com
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