The US dollar index has finally carved a meaningful top at 96.88 over the last week. The index reversed sharply on Friday, producing a bearish Evening Star pattern, indicating a potential trend reversal. Bears will remain inclined to drag prices towards 89.20 and further in the next several weeks. A break below trend line support will further confirm the above bearish reversal.
The index is facing strong support around 93.00-20 levels on the daily chart and bears would be targeting the same, near term. Also note that prices have reversed from the Fibonacci 0.50 retracement of its previous down swing between 104.00 and 89.20 levels respectively. Looking at the wave structure, the next leg should be lower below 89.20 at least.
Alternatively, a push above 96.88 will open the door to test 98.00 resistance and further. It could delay matters further for the bearish scenario to continue. In that case, we shall stand aside and wait for a clear trade direction. At this point in writing, bears are looking in control and inclined to break below 93.00 in the near term.
Potential drop below 93.00 against 97.00.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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