The Dollar index as expected bounced and made a back test of the broken upward sloping channel at 88. Another rejection in this area just below the highs is not a good sign. I expect Dollar weakness to be the main characteristic of the markets in the following days.
Red line = resistance
The Dollar index as shown above has back tested the break out below the black upward sloping channel. Price remains above the Ichimoku cloud but I believe resistance is very strong at 88-88.40 and we should expect a deep correction towards 87 at least. Short-term support at 87.50 if broken could push us towards 87.15 fast.
Blue lines = support
The daily chart remains in bullish mode. The bullish flag remains valid and so is the 91 price target. The consolidation near the highs is very tricky and a daily close below 87.60 will probably signal the start of a downward correction towards 86.35. The double top rejection is a bearish sign. Bulls will need to break above 88.40 for the correction scenario to be canceled. Longer-term trend remains bullish.
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