The Dollar index although it bounced off support it did not manage to remain strong and is pulling back down. The next couple of sessions will be critical for the medium-term trend of the index. The short-term trend is neutral as neither bulls nor bears manage to keep the upper hand.
Red line = resistance
Blue line = support
The Dollar index has short-term support at 87.90 and resistance at 88.85. Price has been rejected in the upper cloud boundaries and this is not a good sign as it now moves below and out of the cloud. Breaking below the support level will most probably signal an important top was made at 89.55 and we are at the beginning of a bigger reversal. Breaking below support and closing below 87.50 will be the last stand for bulls.
The weekly chart is not looking good. This weekly candle may signal more downside action as it was the case in early September when we formed the 1st bullish flag. Bulls need to be very cautious if price breaks 87.50. I will turn bearish if we close below 87.50 expecting to test 86.50 very fast.
The material has been provided by InstaForex Company - www.instaforex.com
