FX.co ★ #USDX Technical analysis for November 17, 2014

The Dollar index made a double top last week. Despite breaking above the triangle pattern, the break out was a fake one and the strong reversal brought the index at the long-term cloud support. The longer-term trend remains bullish. Price has held support at 87 and this is the only good sign as we have also broken below the upward sloping trend channel.

Red line = resistance

Black line = price channel

The Dollar index has broken below the upward sloping channel and this is not a good sign. Support by the Ichimoku cloud is holding the index above 87. The Dollar index is now trying to break above the cloud and we could see a another move towards 87.90-88 as a back test of the break out below the channel. If this is the case, we could see a strong reversal from 88 again. Only this time we should expect the downward move to break 87 and push towards 86.

Blue line = support

The Dollar index continues to trade in a longer-term up trend. First important support is at 86.10 and a break below 87 will surely push us towards that level. The bullish flag pattern remains valid and I believe that the longer-term trend will not be in danger even if we pull back towards 86. Concluding, I remain neutral as I expect to see a rejection near 88 again and a strong reversal towards 87. If 87 is broken, the index is expected to go towards 86.10 which is critical support.