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05.05.201608:57 Forex Analysis & Reviews: Technical analysis of USDX for May 5, 2016

Long-term review

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The Dollar index has started a bullish reversal. This reversal will be big as long as we hold above the 91.90 lows. This reversal has the potential to bring the index even towards 96-98 but it is still too early to tell. For now we have an impressive daily bullish hammer pattern and if this week ends like this we could have a bullish hammer in the weekly candle.

Black line - resistance trend line

The price is below the Kumo (cloud) on the 4 hour chart. The price has broken above the kijun- and tenkan-sen. Support is at 92.80. Resistance is at 93.40. The stochastic is overbought and this could justify a pullback.

On the daily chart, the stochastic is turning upwards from oversold levels confirming that this bounce has more room to go. The candle from two days ago is a bullish hammer reversal pattern. Yesterday's candle was the follow-through that supported this bullish reversal scenario. Resistance is critical by the kijun- and tenkan-sen at 93.55. Bulls need a daily close above those levels.

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