The Dollar Index has reached our target of 81.90 and got rejected at the downward sloping blue trend line. We mentioned before that confirmation of the trend reversal would come if this trend line was broken but this did not happen. The price may be correcting the upward move from 80.86 to 81.90 but we will have to wait and see if prices resume the upward momentum they had the previous two days.
Resistance now is found at 81.90 and if broken, the price will test 82.40-50 area where the intermediate term trend is challenged. The upward move from the lows could be labeled impulsive and we will have to wait and see the form the recent decline from 81.90. If the decline is corrective in nature then we could try and enter long near the 61,8% Fibonacci retracement with the low as stop. Otherwise we could wait and see for an upward break of the resistance. This implies that we enter long at a higher price further away from the stop, but we will have incresed chances of succes as trend will have changed to up.
As shown in the chart above, the price has broken down from the short-term upward sloping channel as we believe the impulsive wave from the lows was complete. The decline if it iscorrective should stop near the 50% or 61,8% retracement and resume upwards. The short-term support is found in those two retracement levels and resistance is found at 81.75 and 81.90. Breaking those levels the bullish scenario will see its chances of success increased.
