The US Dollar Index has most probably topped yesterday as the reversal under way is shaping a very bearish weekly candle. Combined with the bearish divergence RSI signals, the rejection by the Ichimoku cloud at 95, I believe we should at least see a move lower towards 92.
The Dollar index has topped at the same time the media and the traders sentiment were fearful of an new European crisis due to political tensions in Italy. Trending topics in social media with key words like Quitaly or Italexit were an indication for me that too many bears (for EUR/USD the major component of the index) are out there and that most longs got wiped out.
The major component of the Dollar index has bounced off very important support area. Price holds above the 38% Fibonacci retracement and the weekly EUR/USD candle is shaping up to be a very bullish reversal hammer with a very long tail.
I do not know if we are going to form a right shoulder now, all I know that I remain bullish EUR/USD and bearish the Dollar for the next couple of weeks.
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