FX.co ★ Technical analysis of USDX for January 5, 2017

The Dollar index has broken short-term support and is pulling back as expected. Dollar bulls were warned that the signs were there for a strong pullback in the Dollar index and it was time to protect their longs.

Blue line - resistance

Green line - support

The Dollar index has broken through the green trend line support and is trading below the Ichimoku cloud on the 4-hour chart. The bearish divergence in the RSI was a warning I gave in my previous few posts and is now playing out. A backtest of the breakdown could be seen today with a bounce towards 102.40.

Weekly overbought, diverging and turning lower oscillators is not a good sign for bulls. Price has reversed in the past two weeks and I can see a strong pullback towards the 38% Fibonacci retracement near 100. As long as price holds above the green long-term trend line support, long-term bulls will be safe.