The Dollar index made a new high but it was not confirmed by the RSI. The divergence pattern in RSI during the new highs is worrying for bulls specially if price breaks below 102.20. There are a lot of chances we saw a fake breakout and rejection.
Blue line – resistance
Green line – support
The RSI is diverging on the 4 hour chart. A break below short-term support of 102.20 will give a new stronger sell signal that will at least push prices towards the next important support at 100. So bulls should be very cautious if price breaks below the 4-hour cloud and the green trend line support.
The Dollar index is expected to make a pullback towards the 38% Fibonacci retracement near 100. Longer-term trend remains bullish. Only a break below 98 could put the long-term trend in danger. Oscillators are overbought and some relief is expected to be seen there.The material has been provided by InstaForex Company – www.instaforex.com