The Dollar has made an impressive comeback last week and is testing important resistance levels today. Two of the major components of the Dollar index are EURUSD and GBPUSD. Both pairs are at important support levels that need to bring caution for Dollar bulls. Trend remains bearish for these two pairs and there is still no reversal signal. However it is not chance that stopped the decline of both these two pairs at current levels.
This pair not only has it touched the red upward sloping trend line but it has also reached the 61.8% Fibonacci retracement support. Bulls need to break above the green downward sloping trend line again in order to regain control of the trend. Stochastic is at oversold levels but this is just a lagging indicator that warns bears to be cautious. This is not a sure sign of a low that is in.
Same situation in this pair also. Stochastic oversold and at price levels that produces big bounces higher the last time it was there. Price also at important trend line support following the sell off from last Wednesday. Bulls only have indications for now but no real reversal sign yet. Bulls need to step up here and push this back above 1.13 to regain full control of the trend that is mostly sideways for the last 7-8 months.
The Dollar index is also mostly trading sideways for the last 7-8 months and has reached the downward sloping trend line resistance at 97.25. A breakout above this trend line will be a very bullish signal that will imply new highs are coming. A rejection here will bring the index back towards the cloud support at 95.45 where a first test for Dollar bulls will come.
As always, thank you for taking the time to read my latest thoughts.