I have been warning Dollar bulls that a correction was imminent. Yesterday's price action justified this pullback and the market delivered a decline back towards 100. The Dollar index has broken short-term support and confirmed a short-term trend reversal.
Red lines - bearish flag
The Dollar index has broken below the Ichimoku cloud and below trend line support. The last time the Dollar index broke out and above or below the Ichimoku cloud was at 96.50 and price moved 5.5 points higher. We can also see a bearish flag forming on the 4-hour chart with support at 99.92. If broken we should see the index push lower towards 98.
The weekly candle has turned red and made a lower low confirming trend reversal. With oscillators at overbought levels and with bearish divergence in the stochastic, I cannot be bullish. Weekly support is at 99.35 and next at 97.55. Cloud support and trend line support is at 96.20. As long as price is above that level bulls have hopes for new higher highs.
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