The Dollar index bounced as we were expecting since the divergence signals were increasing. The Dollar index has bounced off important support at 99-98.80 area and is trying to break above the first important resistance levels. I believe the most probable outcome will be a lower high and another bearish reversal.

The Dollar index has reversed and is testing short-term Ichimoku cloud resistance at 99.90. Support is at 99.40. This upward move could continue towards 101 if the sequence of higher highs and higher lows continues in the 4-hour chart.

Black line - neckline support

Blue line -trend line resistance

Green line -long-term trend line support

The Dollar index owed us a bounce from oversold levels and delivered it yesterday despite the weakness it showed on Monday. As I said in a previous post, weekly candles are not shaped on Monday and that is why we need to be patient with the weekly close. I expect the Dollar index to make a lower high relative to the 102.30 and then reverse lower towards 98 or even 97.