The US dollar index has reversed from its Elliott Channel resistance around 96.88 over the last week. The index might have carved a lower degree impulse wave after breaking below 95.50 on Tuesday. Bulls might be inclined to produce a counter trend rally towards 96.50-60 zone before giving in to bears again.
The index might drop through 93.00-20 level thereafter, which is the next in-line support. It would also break below the Elliott Channel support indicating a bearish reversal. Bears might be inclined to stay in control till 96.88 holds well.
The US dollar index’s larger degree wave structure is a classic Elliott Wave pattern, five waves down followed by three waves up. The drop between 104.00 and 89.30 was in five waves, labelled as Wave (1) on the daily chart here.
The subsequent rally through 96.88 is in three waves, labelled as Wave (2) here. Also note that Wave (2) terminated around the fibonacci 0.50 retracement of Wave (1), a general wave relationship. If the above holds well, the index should progress in Wave (3) below 89.20, going forward.
Traders might remain inclined to initiate fresh short positions around 96.50-60 zone, with risk above 97.00 mark respectively. The near term target potential remains 93.00-20 zone.
Prepared by
The Profinacademy.com Team
Related Articles
Bitcoin carves potential bottom around $46000
Bitcoin dropped close to $46000 mark on Monday before finding support again. The crypto is seen to be trading around $46500 mark at the time of writing as bulls remain inclined to be back in control.
US dollar index is bearish against 97.00
The US dollar index spiked through 96.85 mark on Wednesday on the back of the Federal Reserve interest rate decision.
EURUSD remains bullish against 1.1186
EURUSD is finding support from its consolidation lower range around 1.1260-70 and could resume its rally from here soon.
