US Dollar Index seems to be producing a complex corrective drop since $91.60 highs and is expected to find support around $89.60/70 levels before resuming higher again. The indice had formed a major bottom at $89.20 on January 06, 2021.
The rally between $89.20 and $90.50 can be counted as clear 5 waves, making a potential impulse or Wave A of a correction. The subsequent price action until today is seen as a series of 3 waves, making a potential W-X-Y combination.
If the above is correct, US Dollar Index is unfolding Wave C within Wave Y lower towards $89.70 at least. Also note that fibonacci 0.786 retracement of the entire rally between $89.20 and $91.60 is also seen around $89.70 mark.
Hence probabilities remain high for a bullish turn if prices manage to reach $89.60/70 zone. That could be marked as a potential Wave 2 as labelled on the 4H chart here. If the above structure unfolds accordingly, US Dollar Index might be set for a Wave 3 rally thereafter.
Alternately, a drop below $89.70 might re-test lows at $89.20 or even print below that in the short term, before finding support again. The alternate count carries less probability though and a bullish reversal should be seen from around $89.70 mark.
US Dollar Index bulls are looking poised to gain control back from $89.70 and push through $94.50 mark, provided $89.20 remains intact, going forward. We remain bullish on the index for now and await a turn soon.
Finacademy Technical Team
Silver has raised through $27.55 levels this morning, alongside most risk assets. The metal has approached a strong resistance zone now and bears might be inclined to take control back soon. Also note that it has almost reached the fibonacci 0.618 retracement of the entire drop between $30.13 and $23.80 levels respectively.
USDJPY bulls are now looking poised to push through 112.00/50 mark, after have carved yet another higher low around 107.50. Please note it bounced off the trend line support since January 2021 lows as well. Looking higher from here for next few weeks.
Gold had raised through $1799 yesterday before reversing sharply towards $1770 before finding support again. The yellow metal is pulling back at the moment and seems to have carved a meaningful top already yesterday. If correct, $1786 might offer strong support.