22.07.201312:04 Forex Analysis & Reviews: Dollar index near the end of the downward correction 22/7/2013

The Dollar index continues its sideways grinding lower as part of the downard corrective move that started at 84.75. The recent downward move is corrective as implied by the overlapping pattern. There is no clear downward impulsive move here and we still believe that prices are heading towards 82.10-20 area near the 61.8% Fibonacci retracement.

Short-term trend remains bearish and our target is 82.10-20. Short-term resistance is found at 83.05 and short-term support is found at 82.20. We believe that soon this downward pattern will reverse to up first by breaking above 83.05 and then the last high at 83.45.

This expected break out will also break out of the sideways corrective channel signalling it is time for an upward move. The form and pattern of this move will be decisive if more upside is possible as we expect. We believe long-term trend is bullish as long as prices stay above 80. So entering long at this level using long-term stops is favorable. As our risk is 2.5 points where the potential is more than 6 points. Concluding, we remain neutral waiting for the 61.8% Fibonacci retracement to be reached. In the long term we are bullish.