Dollar index has broken above the resistance of 84.36. As we mentioned yesterday, for bulls to regain momentum, prices needed to break above 84.36. If that were to happen, a new high would be expected. And so it did. Prices moved sharply higher towards 84.75 and made a new high. Prices held support at 83.95 yesterday and confirmed our upward sloping channel support.
Selling pressures today push the index lower towards the support of the 34 candlestick MA at 84.40. We could see another test of the upward sloping channel support today at the 84.25-15 price level. The 84.12 low is important support for the short term up trend. Bears will need at least to break this level for any chance of an intermediate top to be increased. We still believe that bulls should be very cautious as the rally from 80.50 seems that is losing momentum and the start of a bigger degree correction is near.
Concluding, we prefer raising stops at 84 price level. We believe that if broken, prices will move towards at least the 38% Fibonacci retracement.
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