Dollar Index rises from a key support level at 91.50 as shown in the chart below. 2017 has been a year for a weaker Dollar Index. Is the situation for the Dollar Index about to change in 2018? We take a look at the charts.
Dollar Index longer term Monthly chart:
Taking a look at the longer term monthly chart the Dollar Index formed an AB=CD pattern right at the 61.8% Fibonacci retracement off the retest of the highs in 2002 and the low in 2008. This pattern is highlighted in the blue shaded area.
Since 2011 the Dollar Index has been rising with a clear break of the pannent formation in 2014 giving rise to a parablic rise. Since the beginning of 2017, Dollar index has been under pressure. It has now reached an important level of 38.2% Fibonacci retracement off the 2008 lows at the 91.25 level.
Further taking a look at the shorter term daily time frame, we see the Dollar Index hitting a support pattern at the 91.50 level with an AB=CD formation highlighted in the blue shaded area.
It is critical for the Dollar Index to hold the 91.50 – 91.25 level for the support to remain intact. If the 91.50 to 91.25 support does not hold, we could be looking at a much weaker US dollar against the basket of major currencies with the next significant support coming at the 85 level.