FX.co ★ Technical analysis of USDX for March 11, 2016

The Dollar index rejected our important resistance at 98.50 and reversed lower. There is still a risk for more dollar weakness, but bulls will get in control of the trend only if the index breaks above yesterday's highs.

A s we expected, the Dollar index had a quite volatile session yesterday due to the strategy announcement regarding asset purchases and the rates made by the ECB. EUR/USD is a major component of the index and that is why it made such big swings. Initially, the Dollar index looked strong but bulls could not break above the 98.50 resistance and the Kumo cloud in the 4-hour chart. Prices got rejected and a huge bearish reversal followed, trapping Dollar bulls.

Blue lines depict trading range.

Red line depicts trend line support.

Support is at 96. This is where the weekly Kumo cloud is found. The Dollar index made a lower high at 98.50 and reversed strongly. This implies that more downside and most probably a new lower low should follow soon. On a longer-term basis, the picture remains neutral as price is still trading sideways inside the blue trading range. Support is at 95.20 on a weekly basis. A break below it will open the way for a push towards 93. Bullish reversal and buy signal will come if the price breaks above 98.50.