The Dollar has been a bit bearish since the beginning of the month. Ahead of the FOMC and NFP, will price drop further? The following 5-6 July Dollar Index Elliott wave analysis gives technical insights.
The Dollar completed an important pattern last week that called for a probable bearish move in the coming days. The expected dip is expected to be corrective. The FOMC today and NFP tomorrow will have a lot to say about the short term price deflection. In the last update, we identified 12115-12150 as the resistance zone where the correction might start. The pattern to complete at that zone was a diagonal pattern completing the first leg of a probable double zigzag long term bullish correction. USD is bullish this year but we are likely going to see a big dip. Since the last update, price has broken below the diagonal pattern but there has not been enough momentum to drive it downside. Fast moves usually follow diagonals and we have high impact events coming today and tomorrow. Will they be the trigger? Before looking at today’s update, let’s review the last update where we used the chart below.
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.
5-6 July Dollar Index Elliott wave analysis: what next?
The chart above shows a slight breakout. There has not been enough momentum after the breakout. The first bearish target is 11900 but price could move even deeper if the outcome of the events is bearish for the Dollar. The bullish move should continue if there is a break above 12115 resistance. Stay tuned for the next update.
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