The Dollar index is showing signs of weakness and of a possible downward reversal. There are increased chances that the move from 79.75 is complete and we should now expect Dollar weakness to push the index lower. In the short-term chart shown below, we observe that the trend might have changed to downward since price is making lower lows and lower highs since it peaked at 81.73(right on my intermediate target).
Price is still inside the short-term upward sloping channel. Price is testing the Ichimoku cloud support. The pattern from the lows at 79.75 is most probably a complete 5 wave impulsive move. So, a pull back is justified from current levels. The initial signs for a reversal are there, but technically the Dollar index has not given a sell signal yet. This short-term sell signal will come once price breaks below the Ichimoku cloud and below the upward sloping channel.
In the daily chart, we see that the Dollar index has hit the upper boundaries of the longer-term channel and this is a good opportunity for a top. If the Dollar index breaks below 81.30 we should have a sell signal to go neutral as the trend will have changed. Support is found at 81-80.85 area (the previous highs area) and at 80.50 (the upward sloping blue trend line). I have turned neutral on the Dollar index. My price target of 81.75 that I've been talking about for some time has been met and I now prefer to stay neutral and wait.
The material has been provided by InstaForex Company - www.instaforex.com
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