The Dollar index confirmed its reversal by breaking below important support at 85.50. Now it is testing next support at 85. If broken we should see more selling pressures push the Dollar index towards 84. I warned bulls several times that the parabolic rise should be treated with caution and stops should be raised to protect long positions.
Blue line = support
Red line =price channel
The Dollar index has broken short-term support at 85.50 and is now below the Ichimoku cloud. The Dollar index is heading towards the lower channel boundaries towards 84.75 if support at 85 is broken. Trend is bearish for the short-term. Resistance is found at 85.70 and 85.50. Breaking above these levels will probably bring the index back to its previous highs for a strong test for bulls.
In the daily chart above, the Dollar index has broken below the 23% retracement and is heading towards the 38% retracement at 84.10. Longer-term support is found at 83.25 where the Ichimoku cloud is found and at 82.45 where the 61.8% retracement is. I do not believe though that we will fall further than the 38% retracement but it is still too early to tell. For now I prefer to stay neutral.
The material has been provided by InstaForex Company - www.instaforex.com
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