The US dollar index is bouncing as expected towards 96 where we find the 38% retracement of the decline from 98.50 to 94.40. Bulls need to be very cautious as the short-term trend remains bearish and we could still see a new low towards 93.
Green line = neckline resistance
The US dollar index remains below the Ichimoku cloud on the 4-hour chart and this confirms the bearish short-term trend. The upward bounce could just be a corrective bounce and not a full trend reversal. Resistance is strong at 96 and then at 97-97.20 where the Ichimoku cloud and the neckline are found.
On the daily chart we see that the index is trying to test the lower cloud boundary. If the price breaks inside the cloud, the next resistance will be the price levels of 96.35 and 97.15. A weekly close above 96.50 could be a trend reversal signal. All in all, I believe that soon we will see the end of this dollar weakness and the index will start its new upward move towards 103-104.
The material has been provided by InstaForex Company – www.instaforex.com