The US Dollar Index is reversing lower as expected. I have turned neutral about the dollar in the short term as the price has made an extended impulsive move higher that reached important resistance levels. A pullback towards 96 is justified. However, my long-term view remains bullish targeting at 101-102.
The US Dollar Index is trading above the Ichimoku cloud in the 4-hour chart and the short-term trend is reversing to bearish as a rise from 93.10 seems to be complete. Support is found at 96.30 and 96. The 38% retracement will give us important information as whether we see a deeper correction or a shallow one.
A decline from this year’s highs is represented in 3 corrective waves . The impulsive upward move in the US Dollar Index is overlapping March’s lows confirming that this upward move is not a wave 4 type correction. The three-wave decline has most probably completed the longer-term wave 4 correction and we are now in the early stages of an upward wave 5 that will bring the index above 102. Wave 1 of 5 is most probably completed, so we need to see a pullback before we jump back into longs.
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