FX.co ★ Trading plan for US dollar index on May 18, 2022

Technical outlook:

The US dollar index continued to slide on Wednesday reaching close to 103.00 before finding some bids. The index is seen to be trading close to 103.50 at this point in writing and is expected to hit the 102.30 mark in the near term. Breaking below the initial support would confirm that the broader trend has reversed.

The US dollar index probably hit intraday resistance around 103.60-65 on Thursday. Bears might be inclined to resume towards 102.30 and confirm they are back in control. The next-in-line support around 99.65 would be a near-term target with the price breaking below the trend line support as well. A major top might have formed at around 104.88.

The US dollar index has followed its bearish divergence indicator on daily RSI, which we have been calling for since the 104.88 high. A major Fibonacci support comes just below the 99.65 mark as seen on the chart. The potential remains for bulls to be back in control thereafter. Traders might remain inclined to hold on short positions taken since 104.50 levels.

Trading plan:

Potential drop towards 102.30 and 99.65 against 105.00

Good luck!