The Dollar index, made a very misleading move during the passing week, with an upthrust (a false thrust up) on Thursday. This means that the Follow thru process mentioned in the last review as part of the bullish scenario -failed, at least for now.
The strength of the previous week’s bullish Key reversal bar has turned back throughout the passing week into a bearish Key reversal in return, a bearish pinbar on the declining Weekly 20 SMA.
A thrust down below this bearish Weekly pinbar (Weekly Low at 94.16) -is a bearish setup to reach the Weekly Lower Bollinger Band, approximately at 92.82, the amplitude of the pinbar’s height. Since there is an open gap below this Weekly bearish pinbar, I would be more cautious and wait for an ABC pattern that first should close this gap, then taking again the low is a confirmation for this signal (sketched).
The important thing is that this pinbar’s target, being below the previous week’s Low, might start a chain reaction (1st chain reaction) for another bearish setup, this time to reach a strong support at 91.26. The 2nd chain reaction, is that if this move down succeeds, it takes out the important Low made at May 3rd, and probably might signal for reaching the 87 level area (in the longer term, after a reaction on the support mentioned).
The chances for the bullish move to reach the big midrange levels of 96.5-97 are fairly slim currently, especially if the price does take out the Weekly’s Low (the bearish pinbar).
However, In case the Weekly high at 95.535 is taken out, we are back with the bullish scenario to reach the midrange, where the price is most likely going to find a target between levels 92.42 to 97.1, prior to the expected reversal down to continue the midterm bearish trend.
Dollar Index: Weekly chart (at the courtesy of prorealtime.com)
Disclaimer: Anyone who takes action by this article does it at his own risk and understanding, and the writer won’t have any liability for any damages caused by this action.