Technical outlook:
The US dollar index raised through fresh swing highs around 105.15 on Monday. The index might have found resistance and could resume lower from here soon. On the flip side, bulls might hit another high before reversing lower again. Initial support is now seen around the 101.08 mark and a break below this level is required to confirm that a top is in place.
The US dollar index is seen to be trading just below the 105.00 mark after carving an intraday low around the 104.44 mark on Tuesday. The daily chart is unfolding the Doji (Hanging Man) candlestick pattern and if confirmed, it will indicate a potential reversal ahead. Immediate price resistance is seen above the 105.20-30 zone, and bears would ideally like to stay below that.
The US dollar index has produced a rally towards 105.15, accompanied by a strong Bearish Divergence on the daily RSI as presented here. It indicates a potential trend reversal as bears prepare to come back in control. If the above-mentioned structure unfolds accordingly, watch out for a break below the 101.00 mark sooner than later.
Trading plan:
Potential drop through 101.00 and 99.00 against 106.00
Good luck!
