Red line- parabolic shape
Black lines- Fibonacci retraceents
Blue line- bearish RSI divergence
The Dollar index is making new higher highs every week. Bulls remain in full control of the trend and technically there is no sign of a reversal. There are signs by the RSI that the bullish momentum is weakening and the candlestick pattern is taking a parabolic shape. Is this the time to be short or open new short positions? We are not clairvoyant. However it is wise for bulls to be cautious. More than a year ago and more specifically in March and April of 2021 when the Dollar index was trading around around the 90 level, we warned bears that the similarities to 2017 and the upward reversal that followed the bottom around 90, were very possible to be repeated to another rally towards at least 103. Now it is time for us to warn Dollar bulls. We do no try to call a top. Bulls should protect their gains and try to form strategies for a coming reversal. Already the weekly candlestick is showing topping signs although it is still too early. In the scenario that the top is already in, a minimum pull back towards 103-102 is expected. Such a pull back should not be ignored. I expect the up trend in the Dollar index to show signs of a reversal over the coming weeks. Technically such a pull back is justified. Parabolic rises tend to have violent corrections. So traders need to be on their toes.
