The Dollar index has pulled back towards the lower channel boundary and the top of the support range which I mentioned yesterday. The index still looks like it is making a bearish reversal and I would expect more Dollar weakness over the coming weeks.

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Green lines – bullish channel

Red line – medium-term support trend line

Price is testing the lower channel support at 98.40. A break below it will open the way for a push towards the Kumo cloud at 98-97.80 area. The bearish divergence has warned dollar bulls and I believe a major top is possible.

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Red lines – long-term trading range

Green line – medium-term trend line support

The weekly candle is shaping up to be a very bearish one confirming trend reversal. A weekly close below 98.30 will be a bearish signal. Important long-term resistance is found at 99.50, so even if we make a higher high, the upside potential is very limited. Bulls need to be very cautious as I believe we can see a bigger degree reversal here.

The material has been provided by InstaForex Company – www.instaforex.com

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