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On USD index daily chart we are observing a big sideways pattern since the start of 2015; its slow, sideways and overlapping price action takes a personality of a contra-trend movement that can be completed now. We see it as a flat correction in black wave IV; a three wave structure where the final wave C should be made by five waves. Well, we have seen a nice decline from November of 2015 counted in five legs, but as an ending diagonal. That’s a reversal pattern that already caused a strong bounce in May, so ideally the recent sharp leg down was just a pullback labeled as wave two within an ongoing uptrend and the recent sharp turn to the upside is undergoing wave 3, which could ideally reach 99 region.

USD Index, Daily

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On the lower time frames, as expected, the price made a nice reversal higher at 93.00 area where a three wave corrective retracement had completed. Now we think that the price could already be in a new bullish sequence which can reach 98.60 area in the days ahead, where 161.8 Fibonacci projected level can be met. Currently we see the price in a correction in sub-wave 2), which can find its possible support  and a turning point higher around the upper channel line and previous wave B) swing at 95.55.

USD Index, 4H

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