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On USD index daily chart we are observing a big sideways pattern since the start of 2015; it’s slow, sideways and overlapping price action which is 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

d dx july 14 2016

On the lower time frame, the price made a nice reversal higher in the last few weeks from 93.00 area where a three wave set-back had completed a contra-trend move. Now we think that the price could already be in a new bullish sequence which can reach for 98.00 area, but after a completion of a red subwave 2) that can be headed back to 95.30 region for a support near 38.2% Fibo. ratio.

USD Index, 4H

DX 4 (1)