FX.co ★ U.S. Dollar Index ready to start new upward move

The U.S. Dollar index has made a downward pull back as expected and tested the 61.8% Fibonacci retracement at 83.25. Although it broke below that level, it came back up without breaking the important low at 82.95. Now that the downward correction has retraced the maximum usual size of the previous upward move, we think it is time to start a new upward move that will give a new high above 83.72.

Long poitions are preferred with the recent low(83.09) as a short term stop. First short-term resistance is the 83.40 pice level. It seems like prices are starting a bullish trend pattern of higher highs and higher lows, but it is still too early for that conclusion.

The dollar index as shown above in the 4h chart has held prices above the support of the 34 candle MA. This is upward bounce from support and the large candle tails are a positive for bulls signal that short term may be reversing again upwards. Holding above the 83 level will re-inforce bullish trend andpush the index higher. Concluding we now are bullish with 83 as stop and target at least a retest of the 83.70 level. We think it is most probable to see a new high towards 84-84.20.