AdrianRaymondFX

One possible bullish scenario for the dollar

TVC:DXY   U.S. Dollar Currency Index
Let's keep it as simple as possible. The dollar's in a trading range with clearly-defined support and resistance levels. The market's currently trading in a non-optimal zone for anyone wishing to do long on the dollar. And for those wishing to short, while it may be feasible at current levels for a short-term strategy, you run the risk of seeing the market quickly pare losses to follow through with the reversal that we witnessed at the 92 level (range support) two weeks ago.

I'd really like to see the market make up its mind and find a longer-lasting trend, and given that the overall dynamic remains bullish since 2014, I'd be more inclined to follow bullish trading signals at this point. One scenario that I find interested would be to see the dollar pull back to around 92-93 before once again reversing. Coupled with the right fundamentals and news flow, such price action could provide the ample amount of momentum to really establish a new strong dollar phase in the market.

There could also theoretically be a strong dollar sell off if the Dollar Index             were to break below 92 in the next few weeks. Take a look at the monthly RSI , and you'll see a classic case of negative divergence, November's monthly close being higher than the March 2015 close. We're currently at the crossroads of determining whether that divergence will give way to a real bearish reversal or if we're just in a distribution phase before heading north again (to eventually reach new highs).

Watch this one, because something big's bound to happen.
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