Technical outlook:
The US dollar index might have carved a meaningful top around 99.50-60 mark on Tuesday. The index has pulled back a bit and is seen to be trading close to 99.30 mark at this point in writing. Please note that prices have produced a Doji candlestick pattern on the daily chart indicating a potential trend reversal ahead.
High probability remains for bears to be back in control from here and produce an Evening Star by the end of Wednesday. Furthermore, prices have reached the Fibonacci 0.618 retracement of the previous downswing between 104.00 and 89.20 levels. Bears need to hold prices below 99.60 mark to keep potential bearish structure intact.
The index is facing strong support around 95.00 mark and a break lower will confirm that bears are back in control and a major top is in place. Further, a break below the trendline support would accelerate the drop to 94.50 and 91.00 levels respectively. Looking at the larger wave structure, potential remains for a drop below 89.20 going forward.
Trading plan:
Potential drop to 94.00-95.00 against 100.00
Good luck!
