The dollar index keeps firm tone and penetrating thickening weekly cloud in early Monday (cloud base lays at 105.25) after registering a weekly close above pivotal Fibo barrier at 105.13 (38.2% retracement of 114.72/99.20 downtrend) which generated strong bullish signal.
Last week’s advance marked the tenth consecutive week of gains, with the index being on track for the second monthly bullish close, adding to developing reversal signals on larger timeframes and signaling further gains in coming days.
However, bulls may face increased headwinds from the cloud, as well as fading positive momentum and overbought conditions on daily chart.
Limited dips should be ideally contained by 10/DMA /trendline support (104.90) and not to exceed rising 20DMA (104.57) to offer better buying opportunities for fresh push higher.
Sustained break through weekly cloud to spark further advance and expose targets at 106.96 (50% retracement) and 107.88 (Nov 21 high).
Only loss of 104.17/14 (Sep 14 higher low/daily Kijun-sen) would sideline bulls and risk deeper correction.
Res: 105.85; 106.22; 106.96; 107.88.
Sup: 105.13; 104.90; 104.57; 104.17.
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