Despite a better than expected employment data from the United states last week, the Dollar continued bearish after a major breakout. The following 9 July Dollar Index Elliott wave analysis looks at what should be expected next based on Elliott wave theory.
Prior to the NFP last week, the Dollar had a major bearish breakout after completing a reversal pattern and we expected that to continue. At the end of a reversal price pattern, a correction or trend change is often seen. The NFP came better than the expected data which should have led to a bullish deflection but price continued downside. It seems this will continue for a while though it’s expected to be corrective and limited. The bigger direction is still upside until price proves otherwise. In the last update, we used the chart below to identify the breakout.
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.
Since the last update, price has hit 12000. Further moves below should see price at 11900 and below as the chart below shows.
9 July Dollar Index Elliott wave analysis: what next?
The diagonal is established and ended at 12115 after which price broke below the supporting trend line. An impulsive wave (a) is now being counted from 12115. Wave (a) could continue to 11900 or below before price corrects upside for wave (b) and probably drops afterwards to around 11700. We will see how this plays out in the coming days.
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