FX.co ★ Technical analysis of USDX for December 9, 2016

The US dollar index bounced strongly yesterday, as we expected, towards the cloud resistance near 101.50-101.30. This is important resistance area as rejection here will put the uptrend in danger and will push the index back below 100.

The US dollar index is testing the 4-hour cloud resistance at 101.20-101.50. This is also the area between the 61.8% and 78.6% Fibonacci retracement of the entire decline from its highs to 99.44 levels hit after Draghi's conference yesterday. However, the reversal on the 4-hour chart looks very similar to the reversal from 96-96.50 from the post election reversal.

Green line - support trend line

The US dollar index is making a reversal back towards the important long-term resistance of the 61.8% Fibonacci retracement of the decline from 2001. As long as the price is above yesterday's lows we should expect the USD index to make new highs above 102.50. A break below the yesterday lows should be a bearish and very important reversal sign for the US dollar index.