The Dollar index remains in a bearish trend. Price continues making lower lows and lower highs but recently we observed that the RSI did not follow price to new lows. Instead it provided a bullish divergence. Combined with the fact that price has formed a downward sloping wedge pattern, traders need to be cautious because soon we might get a strong reversal signal.
Red lines – wedge pattern
Blue lines -bullish divergence
The Dollar index has erased most of its rise from February lows. Price is challenging the upper wedge boundary at 90.80. Resistance is important at this level. The Dollar index could move to new short-term low towards 89.80 if price gets rejected at current levels. If bulls manage to recapture 91 and stay above it, we could then see a move higher towards 93 again. We keep a close eye on 90.80 as I believe is a key turning point.
The material has been provided by InstaForex Company – www.instaforex.com