The US dollar index continued to defy resistance and topped the 109.00 level on Thursday before easing off. The index is seen to be trading below 108.00 and potential remains for a drag towards the 107.00-10 initial support in the near term. It could be the first step towards a larger-degree bearish reversal towards 101.00.
The US dollar index has risen meticulously since January 06, 2021, printing the 89.20 low as seen on the daily chart. It has produced a religious rally between 89.20 and 109.00, carving higher highs and higher lows and might have already terminated its rise. Ideally, the entire rally should be retraced and prices should drop towards 97.00 in the next several weeks.
The US dollar index bears are now poised to come back in control and hold prices below the 109.00 interim resistance. Also, note that a potential shooting star candlestick pattern was complete on the daily chart indicating a potential reversal ahead. The initial support is seen at around 103.15, followed by 101.00 which could be potential targets.
Going forward:The US dollar index has been printing recent highs accompanied by a strong bearish divergence on the daily RSI as seen here. The recent high at 109.00 has seen the RSI dropping, indicating a potential trend reversal ahead. Bears might be preparing to come back strong enough from the current levels and drag the price towards 101.00 at least, which is the Fibonacci 0.382 retracement of the entire rally.
Trading plan:Potential drop towards 101.00 against 109.00
Good luck!