Dollar may be at the verge of a fast drop in the coming days. The following 2 July Dollar Index Elliott wave analysis gives technical insights based on Elliott wave theory.
Dollar is about to complete an important reversal wave pattern. At the end of this pattern, price might start a bearish correction move. In the previous updates on Dollar, we expected price to rally up to 12300. It seemed that the best way to get along is to buy the dips into the next series of rallies that are to come. The last two dips happened in the last days of May and the last week of June but none of these dips was the kind expected. It seems a much bigger dip is close. The chart below was used in the last update.
At the end of wave (a) at 12100, the dip wave (b) that follows should be corrective. The first drop which looks rather impulsive is therefore labelled wave a of (b). Price is likely to drop further to 11950-11980 to complete wave (b) before the next rally. Only a break below 11900 would invalidate the large bullish scenario but wave (b) could take lower prices than 12000.
Price didn’t go as deep as expected but turned back to 12100 and now looks likely to break above it. The chart below shows the new update.
2 July Dollar Index Elliott wave analysis: H4 chart
The first phase of the long term bullish correction is about to end with a zigzag pattern. The terminating end is emerging with a a diagonal pattern. Diagonals are known to be usually followed by fast moves in the opposite direction. The chart below focuses on the diagonal mouth.
2 July Dollar Index Elliott wave analysis: H1 chart
The diagonal might have ended at 12115 after a move down to 12050 and might make a new high around 12150 before it eventually drops. If 12115 holds as the top, we should see price breaking below 12050 soon. Otherwise a rally to 12150 is more likely before the drop. Once the diagonal support line is broken downside, we should see lower prices below 11900. This wave forecast will be invalid if price rallies far above 12150 up to 12200. Stay tuned for the next update.
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