Technical outlook:
TThe US dollar index continues to defy resistance as bulls print yet another swing high around 104.00 mark on Monday. Interestingly, EURUSD has refrained from printing below its Friday lows. The above could be a potential turning point soon for the index and EUR. Bears will remain inclined to be back in control soon.
The US dollar index has initial price support around the 102.30 mark. Bears should drag prices lower to confirm a trend reversal and that they are back in control. Furthermore, the daily RSI is producing a strong bearish divergence as shown above. The rise in price through 104.00 is not accompanied by RSI reaching fresh highs.
The above divergence scenarios warn of a sharp potential reversal from close to 104.00. Only a consistent push through 104.00 will open the door to push further towards 104.50 and 105.00 levels going forward. Traders might be aware that the downside risk remains high at this point in writing as they prepare to initiate fresh shorts.
Trading plan:
Preparing for a potential bearish reversal soon.
Good luck!
