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Dollar Index may have topped

Posted at July 8, 2013 Categories : Forex Analysis |

Dollar Index is showing signs of a short term at least top at the 84.55. Our bullish targets as mentioned in previous posts were fulfilled and it is time to see a downward correction. The upward sloping trend channel still contains the trading prices of the Dollar Index. Support is being tested today at 84.30 as increased buyers strength in the EUR/USD puts pressure in the index.

It is possible that this downward price correction that started today will push prices towards the lower boundaries of the trending channel. 83.80 is the support that bulls wouldn’t want to be broken downwards. Short-term support levels where the index could stop this downward correction are the 84.20 and 84 price levels. Breaking below these levels will put the 83.85 support to the test.

We see in the above chart ho steep the rise from 80.50 is. Breaking the upward channel shown in the 1st chart we post today, will signal the end of the move from 80.50 that will most probably lead to a corrective move downwards near the 50%-61.8% retracement(82.60-10). The bigger picture as shown above remains bullish on the dollar with potential longer term targets near 87-88. The higher highs and higher lows pattern supports our bullish view. The longer term trend will be in danger if prices break below 80. Concluding, we turn to neutral as the index might have made a short term top. We will try long positions near the short term support with 83.80 stop. Moreover, an upward move above 84.50 could signal that a short term correction is over and we are heading towards 85.

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