FX.co ★ Technical analysis of USDX for October 31, 2016

The Dollar index has reversed from 99 price level as expected. I have been giving warnings for a bearish reversal for the past few sessions while the index was trading between 98.50-9. On a weekly basis, the weekly chart is not good. There are signs of a bigger reversal from current levels.

Green lines - bullish channel

Red line - long-term support

The Dollar index broke down and out of the bullish channel and as expected has found short-term support at the Ichimoku cloud at 98.30. A break below the Ichimoku cloud and the 98.25 lows should be followed by a deeper pullback towards 96.50.

Green line - important support trend line

Last week's candle is a bearish reversal sign. Combined with the divergence signs in the stochastic and the fact we saw a rejection near the upper trading range boundary implies a pull back should start. Important support is at 96.50 which was the break out level. So a backtest towards that area is expected. If prices break below 96.50, we should expect a deeper correction even below 92. So 96.50 is for me the key between bulls and bears.