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
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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