The Dollar index has almost reached our target of 91.70. Now trading around 91.62 I believe it is time for Dollar bulls to be cautious. Not only because the 91.70-92 area is strong technical resistance, but also because we observe price making unconfirmed by the RSI new highs. This bearish divergence must be cautiously monitored. This bearish divergence makes me decrease long exposure in the Dollar and warns me of a pullback.
Blue line - resistance
Green line - support
Black line - bearish divergence
The Dollar index is rising in a parabolic move higher towards our target. Price is above both the tenkan- and kijun-sen indicators. Support by the tenkan-sen is at 91.30. A confirmation of a trend reversal will come once this level is broken downwards. Cloud support is at 90.50. The RSI is diverging not confirming the new highs by the index. This is another warning that should be taken into serious consideration. I prefer to take profits on the Dollar index longs as I believe a strong pullback should be expected today or early next week.
The material has been provided by InstaForex Company - www.instaforex.com
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