The Dollar index has bounced today off its low at 79.40 just above the critical support of 79.20. We said in our previous analysis that the lows would be challenged. This is what happened and what we expected when 79.50 was broken. Bulls are showing signs of strength. The bounce is such a sign. But we are far from confirming a trend reversal.
The trend remains downward. Price remains below the Ichimoku cloud. Short-term resistance is found at 79.70 and 79.85. Short-term and long-term support is the same at 79-79.20. Bulls need to react now. Price is above critical support and bulls will not give up without a fight. Today's Non-Farm Payrolls number announced will give us a good indication if the index is reversing its trend or it is going lower.
The daily chart continues to support that the trend is downward. Price is below both the Ichimoku cloud and the resistance trend line. However support at 79.20 is very important and I cannot rule out a trend reversal from current levels. However our preferred stance remains bearish as long as price remains below 80 and 80.60. Short-term traders are preferred to stay neutral or bullish with 79.20 as stop. Longer-term traders with short positions should prefer lowering their stops to 80.
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