17.10.201609:21 Forex Analysis & Reviews: Technical analysis of USDX for October 17, 2016

The Dollar index continues to trade in a short-term upward sloping channel but I believe there is no more fuel for bulls left. I believe we should see a pullback towards 96 at least. I'm bearish around 98.

Blue lines - bullish channel

Green line - important long-term support

Yellow line - expected price path

The Dollar index has already given some bearish divergence signals in the RSI and the stochastic. This is a warning and I believe we will not see a new higher high. I believe a short-term top is in. I expect price to break the bullish channel and move towards the Ichimoku cloud.

In the weekly chart price has made a clear breakout above the Ichimoku cloud and above the red downward sloping trend line resistance. A backtest is expected. So a pullback towards cloud support should not be ruled out. However a break below last week's low and a close inside the cloud will be bearish. The form of the rise from the 91.90 lows does not look impulsive but corrective. This entire upward move could very well be part of a bigger correction of the longer-term rally from the 80 levels. There is also a chance of a bigger correction in play here where we could push lower towards the 200 MA near 90 first before continuing the uptrend to new highs.