US dollar index is nearing a potential top around 96.50

Written by

November 23, 2021

Technical Analysis:

The US dollar index has rallied through 96.50 mark, early hours on Tuesday. The indice has hit fibonacci 1.618 extension of Wave A as marked on the daily chart here. High probability remains for a bearish reversal from here soon. A break below 95.46 initial support will confirm the same.

The indice has structurally carved a classic Elliott Wave pattern 5 waves down, followed by 3 waves up as described ahead. The decline between sub 104.00 highs through 89.20 lows subdivided into five waves, carving an impulse Wave (1).

The subsequent rally between 89.20 and 96.52 has unfolded into three waves A-B-C, marked as Wave (2) on the daily chart here. The corrective structure has unfolded as a zigzag (3-3-5), which might have terminated around 96.50 mark.

Also note that Wave (2) has almost rallied through the fibonacci 0.50 retracement of Wave (1), which is a common guideline. Probability for a bearish reaction remains high around current levels with many convergences seen.

If the above proposed structure hold well, the US dollar index might be setting up for a bearish reversal from 96.50 zone. Target potential remains below 89.20 in the next several weeks as traders remain inclined to initiate fresh short positions.

Prepared by

Finacademy Technical Team

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US dollar index is bearish against 97.00

US dollar index is bearish against 97.00

The US dollar index might have carved a lower high around 96.50 mark on Tuesday. The index dropped through 95.80 levels on Wednesday before finding some support.