US dollar index bears target 93.00 mark

Technical Analysis:

The US dollar index has been carving a lower degree wave ii below 96.88 mark since last few trading sessions. The index had produced an Evening Star candlestick pattern right at Elliott Channel over the last week. It further dropped through 95.45 mark before pulling back toward 96.30-40 range.

The lower degree wave counts might be labelled as follows: Wave I terminated around 95.45, while wave ii might be complete around 96.40 mark. If the proposed structure holds well, the US dollar index should be underway toward 93.00 and lower as wave iii unfolds.

It would be interesting to see how price action turns around 93.00 mark. The preferred count suggests further decline after a minor pullback. Having said that, an alternate scenario could be another rally above 96.88 highs. We shall decide the trade plan after 93.00 breaks in the near term.

The overall structure since 104.00 high also presents a classic Elliott Wave pattern (5-3). Earlier drop between 104.00 and 89.20 was in five waves, while subsequent rally through 96.88 is in three waves respectively. If the above is correct, the index is likely to unfold another five waves lower below 89.20.

Traders might be inclined to remain short against 97.00 resistance for now. The short term target potential is seen towards 93.00 at least.

Prepared by

Finacademy Technical Team