Following Janet Yellen’s speech last Friday, the Dollar index is eventually strengthened. So breaking above resistance levels implies a short-term trend reversal. The medium-term bullish trend remains intact since support at 94.20 was held despite the higher volatility last Friday.
Red line – resistance
Blue line – support
Although the initial reaction after the comments from Janet Yellen in Jackson Hole was bearish for the Dollar, buyers entered the market and reversed the trend with the index spiking above both the cloud and trend line resistance. Trend has reversed and the 94 level is a very crucial support area for the longer-term trend of the index.
Green line – long-term support
Price has bounced off the green trend line support confirming the important of the 94 support level. Price is now testing the resistance of the weekly tenkan-sen indicator but we need to remind ourselves that we are still below the weekly cloud. This decline was the result of the cloud rejection in the first place. Yes, the reversal is a very nice bullish signal that traders should not ignore, as this could be the start of the next upward move that will finally break above the weekly cloud. Stops are at 94. Traders should favor bullish Dollar positions.
The material has been provided by InstaForex Company – www.instaforex.com
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