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.
Finacademy Technical Team
USDJPY could be progressing into a counter trend rally toward 114.30-50 zone in the next few trading sessions.
Gold dropped to $1770 mark on Tuesday before finding some support. The yellow metal is still testing its intermediate trend line support connecting $1721 and $1758 levels respectively.
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.