The Dollar index showed renewed strength yesterday and broke out of the short-term bearish channel. Is it a trend reversal? The decline has an overlapping structure which implies we are in a corrective phase. The long-term bullish trend could re-start any day.
The Dollar index has started the day in an overbought area so traders should better be patient and look for long positions only after a pull back to 94.55 that is a stop for any long position. Bears should look for short positions at current levels with stops placed at 96.50 level. In the 4 hour chart, price is still below the Kumo and that is why we have no confirmation of a short-term trend reversal.
In the weekly chart, price continues to trade inside the trading range and it is now testing the upper Kumo (cloud) boundary resistance at 96. A daily close above this level could push price over the coming sessions towards the kijun- and tenkan-sen indicators at 97.20. Weekly stochastic is oversold and diverging. I believe the bullish trend that dominated the Dollar index during 2014 will once again resume in order to push the index to new highs.