Since 9/17 the dollar has enjoyed a small little rally after being beaten down badly over the summer. It was noted here that the 78.80 level could act as strong support for the dollar and end the decline. This level has acted as support and send the dollar higher but the bounce could be over the the downtrend could begin again.
DX has formed a nice look bear flag pattern and it has run up off the lows in mid-september. This run up is now coming up to resistance at the 80 dollar level, which comes from the 377 day MA but more importantly, this level is also a 23.6% Fib retracement from the total decline since the high in the summer. 
The bear flag’s measured move is about 3% so if DX breaks its flag which is anywhere below 79.70 it could potential mean another 3% drop in the dollar. There are two cavets to this bear flag. The first being the obvious long-term support at 78.72-78.63. This area will have to be broken before the dollar can drop the other 1.5% of the decline. Second is the larger the pattern the larger the move the vulnerable it is to other market forces.
This is something to keep an eye on because another strong decline in the dollar could lift oil, and metals and potential the market.
