We clearly have to look for sell setups, but as always, the risk/reward of a short entry is the key question!
We have multiple signals that the general USD Index IS turning strategic BEARISH, but we also have a lot of warning signals for short term, which makes me think we'll have some better (higher) levels to enter short, instead og runing into it right now ard 94,00+
Weekly: - Ichimoku setup iturned neutral, with BEARISH bias! Most importantly look at the future Kumo 26 weeks ahead! It is close to eliver a bearish Senkou Span cross (bearish Kumo twist). Price is below Kijun, and we also had a close below 100WMA. Tenkan/Kijun is also weak bearish. Chikou Span is still at past candles, but may not enter open space. What makes me think USD bears face some initial resistance here? First of all the spot Kumo is still very thick, and Price is already quite far below Kijun Sen. - Heikin-Ashi is firm bearish. Lower low last week, with long bearish candle body. haDelta/SMA3 crossed down. - EWO is increasingly bearish.
Looking only at weekly setup, we have two possible scenarios (both bearish of course): 1. Price breaks below 94,00 key support and immediately tests 92,60. However I think 92-92,60 area would block bears anyway, so we could see a pop to 95 from there later. 2. Price penetrates 94 next week, maybe even makes a lower low, but price action fades: candle finally closes above, and haDelta/SMA3 will point up again. In this we'd see a consolidation or a pull back towards 96 in following weeks, before next leg down.
Daily: - Ichimoku setup is absolutely bearish. - Bearish supports (where we can look for sell signals in case of a pull back) are: 95,10 / 96,21 / 96,85 (strong support) - Heikin-Ashi is bearish, but watch out what haDelta signals! It has a positive divergence. It means the bearish momentum is somehow dropping. This price action concides with a possible channel bottom: bearish resistance. - EWO is bearish, but it failed to make a lower low, while price reached a lower low two days ago. Again, we have a minor positive divergnece here!
Given the small warning signals of haDelta and EWO divergences on the bearish daily chart, I assume the above mentionned 2nd scenario has higher probability to happen.
One thing you have to burn into your mind! USD is not a startegic buy any more!!! The better risk/reward will be on the short side. Only very disciplined and sharp traders with long term experience, and solid risk management can try counter trend longs in USD, but even they are recommended to do only 0,5 risk adjusted trade units. Long term strategists and trend followers will look for sell signal in case of pull backs.
For now, my position is neutral on USD. I am looking to enter short at higher levels with better risk/reward.