The Dollar index fell lower towards our target 80.75 we mentioned yesterday. Once the short-term upward sloping trend line was broken at 81, it was a matter of time to move towards 80.70-60. The index fell towards the 50% Fibonacci retracement and reverses upwards right now. Short-term trend remains down but since the index reached our buy area it was wise to get out of short positions. Now we have to pay close attention if the index manages to break above the resistance level of 81.25.
Breaking above 81.25 will increase dramatically the chances of reaching 81.50 and breaking it. Important low is now 80.75. If broken we should expect to see 80.60 and why not 80.55. The decline is corrective and in three waves. Unless this unfolds into something impulsive, we should expect the upward move to be impulsive as the first move from 80.15 to 81.35.
The daily chart continues to favor bears as the index remains below important daily resistance 81.40-50. Breaking above this level will target 82.50-83. On a daily level we prefer short positions as long as prices trade below 81.50. Target for short positions on a daily basis is 80.20 at least.
