The Dollar index has topped

Τεχνική Ανάλυση Γενικού Δείκτη και Τραπεζικού Δείκτη
October 31, 2016
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November 1, 2016

With the possibility of rates increasing in December by the FED, the Dollar index is found at its 9 month highs. Price has reached important resistance of 99 price level and several indicators point to a bearish reversal at least towards 96.50. This is not the time to be bullish the Dollar. EURUSD the major component of the Dollar index is also turning upwards (negative for the Dollar index) and a major low could already be in.

eurusd

Another important component of the Dollar index is the USDJPY which also shows signs of a bearish reversal (negative for the Dollar index).

usdjpy

The Dollar index has already made a bearish weekly candle last week and yesterday’s bounce was not strong enough and we are already breaking below last week’s lows.

usdx usdxd

The Dollar index is at overbought levels giving bearish divergence signals. Price has broken out and above the weekly cloud resistance but has reached the upper trading range boundary at 99.50. The bearish reversal we see now should at least back test the break out area of 96.50. A move below the weekly cloud support and the upward sloping green trend line (now at 95.8) will be a very bearish signal that will imply a push towards 92 is very possible.

Elliott wave wise the entire rise from 91.90 is not impulsive, BUT could unfold to something impulsive. For the time being both bearish and bullish wave scenarios are equally possible but a break below 96.50 will cancel all Elliott wave bullish scenarios. Combined with the bearish technical view of current market situation, I prefer to be bearish.

Concluding, I’m bearish the Dollar right now and have short positions in the Dollar index. My preferred scenario is a push even lower than the 92 price level. 96.50 is key support level. More analysis as prices unfold and the US elections pass.

Alexandros Yfantis
Alexandros Yfantis
Fascinated by financial markets, studied International Securities Investment and Banking in the UK, works as a Portfolio Manager in Greece and runs a technical analysis website. Enjoys travelling and spending time with his family and preparing for the black belt in Korean Karate.