FX.co ★ Trading plan for US dollar index for May 02, 2022

Technical outlook:

The US dollar index might have carved a meaningdul top around 103.80 or it could carve one very soon. The index has pulled off the highs and is seen to be trading close to 103.28 mark at this point in writing. Bears were successful in dragging prices to 102.65 mark on Friday though. Ideally, prices should stay below 103.80 level going forward.

The US dollar index has strong support around the 99.65 mark, followed by 97.70 and 94.60; while interim resistance is seen at 104.00 mark respectively. Bears need to break below 99.65 to confirm a top is in place and that they are back in control. If a major top is in place, the index would slide below 94.60 and its support trend line.

The US dollar index has rallied from the 97.70 lows through 103.80 highs in straight four weeks. The rise in price has not been accompanied by the RSI printing fresh highs (not shown here). This potential divergence scenario could initiate a trend reversal going forward. Only a consistent break above 103.80 will open the door to test 104.00.

Trading plan:

Potential drop to 97.70 against 104.00

Good luck!