Time’s Up For The Dollar Rally

Has the bull run in the Dollar index reached its peak? Is the Dollar index about to resume its bearish trend towards 90 or lower? I believe that there are increased chances the answer is yes to both questions. Why? Since the 91.50 low on September 20th, the Dollar index has completed 5 waves up. However the price action prior to the 91.50 is a two wave pattern, with the first wave up clearly a corrective zig zag pattern.

The rise from its yearly lows at 91 is clearly a 3 wave move to complete wave A. The decline towards 91.50 from 92.66 wave A high is also a 3 wave pattern labeled wave B. We are now at the final stages of the 5th wave if not already complete. This wave formation is a classic corrective pattern and once it ends, the previous trend resumes. In this case, the longer-term trend was bearish.

In the daily chart price is below the Kumo (cloud) and inside the bearish channel. Price has bounced towards Kumo and channel resistance and I expect to see a rejection, based on my previous wave count shown in the 4 hour chart above. The rejection should lead to a decline in the index towards 90 or even lower.

This is my primary scenario on what to expect from the Dollar index. 

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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