The Dollar index continues its downward pullback towards short-term support at 85.20-85.30. Breaking below 85.20 could start a bigger downward move that will put 84.45 in danger and bring the index towards 84 where the 38% retracement from 79.75 is found.
Black line = previous resistance
The Dollar index is now testing cloud support at 85.20-85.30. Price remains above the Ichimoku cloud and above the downward sloping trend line that was once resistance. Short-term resistance is found at 85.60-85.70. Breaking above this level will put 86 level to the test. Important resistance level at 86 needs to be broken in order for the up trend to resume towards 87.20.
The daily chart continues to be bullish but could also justify a pull back towards the cloud support at 84 where we also find the 38% retracement. The bullish flag pattern remains valid with 91 as first target. My strategy is to buy on signs of strength and not try to pick a bottom.
The material has been provided by InstaForex Company – www.instaforex.com