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US Dollar Index forming potential head and shoulders
Yesterday saw the Dollar Index fail to break back above last week’s $98.00 peak, with the price instead topping off around $97.50. With the price having seen substantial gains and reaching a key long-term trendline resistance, the fact that we are now seeing this kind of failure to regain the price back above this trendline is a bit of a warning.
Given the lower high, we have a potential right shoulder in a possible head and shoulders pattern. Thus there is a possibility that this could be a top, where the neckline is around $96.74. This also represents the approximate September resistance. As a result, I am less bullish given the failure rally yesterday and instead either await a close below $96.74 for bearish connotations (support at $96.52 and $96.15) or else a bullish reversal sign between $96.89 and $96.74 (subsequent resistance at $97.40).