The US dollar index has started to accelerate higher once again, with bulls now looking for a break above the yearly high, which is currently located close to the 109.00 resistance zone.
One of the things that has been most shocking is the speed of the move higher in the US dollar index over recent days. The index sunk below 105.00 recently and now the price has recovered by over 300 points.
Such moves are nearly unheard of in the US dollar index in such a short period of time. This really speaks to not only the demand for greenbacks but also the rise in volatility in the foreign exchange market.
With the EURUSD pair breaking down things look very good for further US dollar appreciation. The technicals are suggesting more gains ahead, however, sentiment is positively screaming more upside.
According to the ActivTrader Market Sentiment tool some 87% of traders are bearish towards the US dollar index, which strongly hints that retail could be in for more pain this week.
With this type of sentiment bias the US dollar index truly has the potential to go parabolic over the coming days and weeks. I suspect if we break the 109.00 level then this could happen.
With retail traders starting to turn hugely bullish again we are probably going to see the US dollar index heading much, much higher. I think it’s time to raise long-term price target towards 114.00.
US dollar index Short-Term Technical Analysis
Technical analysis on the four-hour time frame shows that the US dollar index has bounced sharply from a large rising price channel. The channel is located between the 106.00 and 110.00 level.
According to the overall size of the typically bearish pattern it shows that the US dollar index could be preparing to stage a move of around 400 points. I think the 114.00 looks like a probable target.
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US dollar index Medium-Term Technical Analysis
The daily time frame is showing that US dollar has ignited a huge bullish reversal pattern. Last week it appeared a retest and bounce took place.
Until It is a very important week for the US dollar index. Lower time frame is suggesting the 114.00 level is a bullish target, and now higher time frame analysis is calling for 114.00 as a major target also.
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