The Dollar index made a breakout above 80.70 yesterday after Mario Draghi's comments on the ECB monetary policy. As expected by our analysis, the Dollar index held the short-term support trend line and made a break above the 80.70 resistance we were talking about. Our target was 81 if resistance were to break. And this is exactly what happened. The Dollar index reached 81 and reversed to close the day with a very bearish candle.
The Dollar index did not only pull back below 80.70, but also broke below the short-term upward sloping trend line and is now testing important Ichimoku cloud support. If Ichimoku support is broken at 80.25, we should expect the Dollar index to move towards 80. Things for now do not look bullish, as the daily chart below shows a very bearish reversal candle.
In the daily chart, support is found at the 80.25 level where the 38% retracement is found. Next support is at 80 where the 50% retracement is. I expect to see Dollar weakness and a pull back within the next couple of days .
