The Dollar index as expected has made a bigger pullback towards the 97 support area after being rejected last Friday at 98.20. Now it is important to see how the market will react because if we break below 97, a bigger correction might be at play. On the other hand, bullish positions should be favored at current levels targeting new highs.
Red line – resistance
Green line – support
The Dollar index has reached the green trend line support and the Ichimoku cloud support as shown in the 4-hour chart above. Support was held and price bounces supporting the bullish scenario. Important resistance is at 98.20, so another break above that level will be more reliable now after this pullback,
Red line – weekly downward sloping trend line resistance
Green line – weekly upward sloping trend line support
The Dollar index was initially rejected at the weekly trend line resistance but has held above the weekly kijun-sen (yellow indicator). A new higher high above last week's high will be a bullish breakout signal that could push the index to 100 again and why not to new highs. So bulls should be careful in case we see new lower lows and bears should also look to protect themselves if we break above the red trend line.
The material has been provided by InstaForex Company – www.instaforex.com