The Dollar Index has shown signs of weakeness yesterday and as per our analysis it could stay there in short-term at least. The major inverse component of the Dollar Index, the EUR/USD, continued higher putting pressure against the dollar. As mentioned yesterday, the 84.30 support was being tested. Having broken below that first support level, we could expect the downward move to pause near 83.95.
The 83.95 price level supports the upward trend since it is the lower boundaries of the upward channel. The short-term resistance is found at 84.36. For bulls to regain momentum we should see an upward break of that price level. Breaking this price level without breaking the upward channel at 83.95 could signal a last new try to make a new high. We are going to enter long above 84.36 with the last low as stop and target to sell near 85. If however the upward channel is broken, I'm expecting the for prices to fall further towards 83.
It is very probable that the entire move from 80.50 is over. Therefore, there is a high probability for prices to move towards 83.65-15 Fibonacci support levels. Therefore, bears can prefer going short with 83.15 as target and 84.60 as stop.
