Dollar gains still possible, but signs of trouble emerge
UUP•The dollar index has gained 2.8% from trough to peak since its rally began in mid-September, but bearish chart patterns suggest the risk of a pullback is growing. A fall below the 100-week moving average near 100.7 could put 100 and possibly 98.5980 in focus; a rise above 101.63–101.80 could open a path toward 102.87 and 104.59.
1. Bearish patterns emerge
The dollar index has climbed since mid-September and surpassed its 100-week moving average last week, a move that appeared to support further gains. It then formed a bearish engulfing pattern on Friday, followed by a bearish harami on Monday, which are viewed as signs of fading momentum and possible indecision.
2. Key chart levels
A fall below the 100-week moving average near 100.7 could make the 100 area important and raise the possibility of a decline toward the September 9 low of 98.5980. If the recent bearish pattern proves temporary, traders may focus on 101.63 to 101.80, the June and July highs; a rise above that range could lead toward 102.87 and possibly 104.59.
