Technical outlook:
The US dollar index continued to defy resistance as bulls pushed the price through the 104.80 swing highs on Thursday. The index has produced no signs of a bearish reversal on higher time frames yet, keeping doors open for a push through 105.00 in the near term. Bears need to hold below 104.80 to enforce a turn lower from here.
The US dollar index remains well supported around 102.30, followed by 99.65, 97.65, and lower, while resistance is above the 105.00 level respectively. Only a break below 102.30 will release further upside pressure and confirm a potential top in place. The uptrend, which began from the 89.20 levels, has surpassed all fibonacci extensions through the 100.00 mark.
Having said that, it is worth noting that the recent price rally through 104.80 has been accompanied by a continued strong bearish divergence on the daily RSI as seen on the chart. This is a potential trend reversal and the only encouraging point for bears at this point of writing. Traders still await a confirmed bearish signal to initiate fresh short positions.
Trading plan:
Prepare for a potential drop.
Good luck!
