Yesterday the Dollar Index managed to make another new low as expected and then pulled back up to change short-term trend. Despite the fact that short-term trend is up, we believe that we are still inside the downward corrective wave and that 82.10 is still a feasible target. The daily chart as shown below depicts the inability of the index to break above the big red bar two days ago and it seems it is trying to form a bottom.
Long-term trend is up and long-term support is the 82.10 and 80 levels. Long-term resistance is found at 83.75 and 84.75. We believe the downward move from the July high is corrective and soon dollar strength will sart pushing prices upwards in an impulsive pattern.
Although short-term trend has changed to up, the pattern of the rise from 82.35 to 82.90 is overlapping, and thus we believe it is part of the correction. Therefore, we expect prices to break down again towards 82.10. Short-term resistance is found at 82.95-83 and short-term support is found at 82.65. I remain neutral for the short term, expecting to consider long positions when a new low close to 82.10 is made.
