22.05.201411:10 Forex Analysis & Reviews: #USDX Technical analysis for May 22, 2014

The Dollar index continues to trade above the Ichimoku cloud support as price bounced off 79.90 and reached the recent highs again. The Dollar index was unable to break above the highs and that is why because we feel the correction is not over yet. I believe another leg down towards the 38% retracement and inside the Ichimoku cloud is the most probable scenario.

The Dollar index I believe should pull back towards the 38% retracement or even the 50% retracement before making another try higher above 80.35 towards 80.70. The current price action is clearly corrective as there no clear pattern and there are lots of overlapping price waves. I'm neutral expecting to see a pull back or a break out to new highs before entering the market again.

The daily chart continues to show us that long-term trend is down since price has not broken an important high (80.70) nor has it moved above the Ichimoku cloud resistance. If these two conditions are met, then we can say that longer-term trend has reversed upwards. Until then I remain neutral and will only look for short-term buying opportunities. Traders that feel bearish about the Dollar index have a great opportunity as the index is near its resistance levels. So going short at current levels with 80.40 stop is preferred by those who believe that the Dollar will weaken.