The Dollar index made a double top and got rejected. This pullback might be part of a bigger correction towards 87 or even below it. The longer-term trend remains bullish and our bullish flag target of 91 is still in play. Bulls need to be very cautious as we might see a pull back towards 86.70. I believe this will be another buy opportunity.
The Dollar index remains inside the upward sloping channel and above the cloud support. The 38% retracement is at 87 and the 50% retracement at 86.70. Short-term support is found at 87.40 and resistance at 87.75. Whichever side the index breaks, I expect a follow-through.
The bullish flag pattern has given us 91 as a target. Can we see a pullback towards 85-84 before this target is reached? Yes it is possible and that is why bulls will need to be very cautious specially if support at 87 is broken. The Dollar index has a daily support at 87.16 and at 86.35. So, we need to be very carefull if we close below any of those two levels.
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