Is the Dollar Index Forming a Double Top Pattern?

The greenback lost ground on Thursday and fell notably, with the same trend occurring on Friday as well and the Dollar index was also down by 0.25 per cent during the London session, trading near 96.10.

Bulls failed to push the index above August’s highs at 97.00 and therefore, bears took control and pushed the index back below this resistance. Thus, it looks like a double top pattern on the daily chart, which is a reversal formation.

The price seems to head to the major support zone near 95.50, where previous highs are converged with the short-term bullish trend line. If this level is taken out, the bearish reversal could be confirmed with the next target at the 100-day moving average at 95.20.

The RSI indicator is already below the bullish trend line, which could be another bearish signal.

Interestingly, the greenback is easing despite US yields marching higher, which is an unusual divergence. Since the equity markets calmed down and began to rise again, the market has upped the odds for the December rate hike again, but the US Dollar also ignored this.

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