US dollar index carves a potential top at 96.88

Technical Analysis:

The US dollar index carves a meaningful top around 96.88 mark over the last week. The index reversed sharply on Friday confirming a bearish Evening Star candlestick pattern on the daily chart. Bears are now looking poised to remain in control from here.

The index is presenting a classic Elliott Wave pattern, which is five waves down followed by three waves up since 104.00 highs. The drop between 104.00 and 89.20 has been sub divided into five waves, marked as Wave (1).

The subsequent rally between 89.20 and 96.88 has unfolded into three waves A-B-C, a standard flat. The corrective Wave (2) has also managed to reach up to fibonacci 0.50 retracement of Wave (1). If the above proposed structure holds well, US dollar index should resume lower towards 89.20 soon.

The critical support to watch will be 93.20 mark. A break below that will confirm a meaningful trend reversal ahead. The next support will be seen around 92.00 levels, which could provide a corrective bounce going forward.

Traders might remain poised to hold fresh short positions since 96.50-80 and also add more. Risk remains just above the 97.00 mark while near term target might point below 93.00 levels respectively.

Prepared by

Finacademy Technical Team