Research Team at Societe Generale, suggests that the Dollar Index is now at the 'make or break level' of 92.50/92.10, the lower part of the broad 1- year consolidation zone which intersects the upward channel limits in force since 2008 and 2011 lows.
"More importantly, 92.50/92.10 corresponds to the neckline of the Double Top pattern the Index has been tracing after it failed to overcome the stiff resistance of 100.40. Should the Index confirm the pattern, i.e. breaks durably below 92.50/92.10 (weekly close) it would imply a potential down move towards the projected potential which is located near 85 levels. This would also mean re-integration within the aforementioned channels which would entail considerable risks to the entire up move since 2008.
Short-term, the Index is clearly witnessing increased downward pressure of late as highlighted by the bearish engulfing formed last week. Break below a daily descending channel indicates snow balling downside risks. Although both weekly and daily indicators are currently testing multi-year floor they remain on a shaky ground. If the down move extends further, immediate projections for the Index would be at 91.30 and 90.95 with key objective being near graphical levels of 89.60/89.00, also the 38.2% retracement of the uptrend from 2011 and 2008 lows."
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