FX.co ★ Technical analysis of USDX for August 8, 2016

The Dollar index rallied last Friday after the strong and higher than expected NFP numbers. Since the mid of last week I warned Dollar bears that it was about time for the Dollar index to reverse once it reached the 50% retracement level.

In the 4 hour chart price has hit Kumo resistance at 96.30-96.50. A reversal and rejection at this area is possible as this is important short-term resistance. A break out above will open the way for a re-test of the 97.30 area and even higher levels.

Last week's candle held support and made an impressive bullish body implying that the up trend may very well be resuming. The first important resistance is the weekly Kumo at 96.50. A weekly close above will open the way for a push above 97.30. However, with stochastics overbought and turning lower we should be cautious in case we see a rejection at 96.50. Last week's high is very important for the short-term trend.