The Dollar index has broken below the short-term support levels and has started a deeper downward correction as I warned last week. In my previous analysis, I suggested that bulls should be very cautious and raise their stops as the Dollar index was near completing the rise from 85.
The Dollar index has started a short-term reversal that is heading towards the short-term support at the 38% retracement at 87.10. At 86.75 we find the cloud support that will be tested if we break below 87.10.
In the daily chart the Dollar index is showing signs of reversal and that the upward move from 84.40 is complete. So, we could see a pullback towards 86 where the 61.8% retracement is found. This scenario does not cancel the target of the bullish flag pattern. This pullback is seen as a back test of the break out highs at 86, so I consider it as another buy opportunity. The longer-term trend remains bullish.
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