The Dollar Index has broken the trend line support as it was expected by our last analysis due to the bearish flag pattern being created. The first target at 80.70 was almost reached and trend remains down as inability to break above resistance has resulted to new lows. Short-term support is found at 80.80 and 80.50 now. Resistance is found at 81.20-35 area.
The bounce will probably test the blue trend line resistance near the 81.25 area. I expect prices to get rejected once again and resume down trend to new lows, as the pattern in EURUSD the major component of the Dollar Index looks bullish after breaking above 1.34.
Looking at the daily chart we see that the pattern of lower lows and lower highs persists and after breaking the support trend line yesterday, today we see a naturaly expected back test. Prices will need to break above 81.45 and 82.00 for trend to reverse upwards. Until then we remain short biased with short term target the 80.50 price level.
