28.08.201411:02 Forex Analysis & Reviews: #USDX Technical analysis for August 28, 2014

Although the Dollar index remains inside the upward sloping channel of the move that started at 79.75 and although intermediate-term trend remains bullish, we noted yesterday that there were plenty signs of a possible trend reversal above 82.50 area that would push the index lower.

Yesterday, I warned about the sell signal given once the green upward sloping trend line was broken. Besides, price has broken below the Ichimoku cloud support at 82.35. It looks that we could push lower towards the 38% Fibonacci retracement at 82.20 at least. Short-term price movement is inside a small downward sloping channel and I believe more dollar weakness should be expected.

The daily chart remains bullish as price is above the Ichimoku cloud and inside the green channel. However we got really close to the upper channel boundaries and the rejection was a strong reversal sign that we noted yesterday and said that bulls should be very cautious and raise their stops. As I mentioned yesterday, I prefer to be neutral or bearish than long at the current levels. There is a confluence of Fibonacci support levels at 81.60 and I think it is very possible to see a strong pull back to that area. For now, bears need to break below 82.20 and bulls need to retake 82.50.