FX.co ★ #USDX Technical analysis for May 5, 2014

Despite the sharp rise from the lows, the Dollar index could not manage to break above resistance and got rejected once again. The choppy action of the last few days cannot give bulls something to hope. However as long as the index remains above the 79 very important support level, bulls will remain alive. On the other hand, bears have the trend under control. Price remains below the Ichimoku cloud in all major time frames.

Any upward bounce lacks any impulsive sign. Price continues to make lower lows and lower highs. Price is again near important support of 79.20. Bulls will need to make a bounce and break above the last high at 79.85. This will be an initial bullish sign. On the other hand, bears need to break below 79.20. Currently a break below 79.20 will be another sell signal with 78.50 as a target. A break above the Ichimoku cloud is a buy signal. Breaking above 79.85 will give us target of 80.15 and at 80.60.

The daily chart continues to move below the daily Ichimoku cloud and below the blue trend line resistance. As long as this happens, the trend will be downward. A trend reversal will be confirmed once this breakout occurs. Until then we prefer to remain neutral as price is above important support at 79.