The Dollar index remains above short-term support after the bounce from 84.45 towards 86 but the intermediate-term trend is still unclear. As long as we do not break the 86 resistance level, we could still be inside a bigger corrective pattern that could bring us towards 84. Short-term strength signals however point that support at 85.20-85.30 should hold if we are going to break 86 soon.
Black line=resistance
Blue lines= price channel
The Dollar index moves inside an upward sloping price channel but below important resistance level of 86. The Dollar index remains above the Ichimoku cloud in the 4-hour chart, tenkan-sen has crossed above the Kijun-sen and the Chikou span is above the candles. Most Ichimoku cloud indicators are bullish and technically we are still above support of 85.35.
Once again, I point out the weekly chart where a huge bullish flag has been formed and we have seen a break out above it. The target for this bullish flag is at 91 and that is why I remain longer-term bullish from the current levels because the form of the decline has been corrective in nature and has almost reached 38% retracement from the low at 79.75. We could still see a sharp decline towards 84 which is the 38% retracement but I do not believe we will see lower. My strategy is to remain neutral and buy the Dollar index on signs of strength.
The material has been provided by InstaForex Company - www.instaforex.com
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