Technical analysis of USDX for May 4, 2016

The Dollar index made a strong reversal yesterday as I had warned the Dollar bears. There were several signs that the Dollar index was getting too oversold and that a bounce would come any time. This reversal coincided with price reaching an important long-term support level.

The Dollar index remained below the Kumo on the 4 hour chart. This implies that Dollar bulls are still not safe. The trend remains bearish despite the bounce. Price reached the kijun-sen (yellow line indicator) resistance. Bulls need to break above it so that price could move towards the Kumo (cloud) resistance at 93.80.

The weekly candle has a very bullish look as price reversed upwards yesterday. We could recognize the bullish hammer pattern. Price reached the 38% Fibonacci and bounced strongly. This is a bullish sign. Stochastic is oversold and diverging. This is also another sign that a bigger reversal could start.The material has been provided by InstaForex Company - www.instaforex.com