Technical outlook:
The US dollar index rallied through 98.90 levels on Tuesday before finding resistance. The index reversed sharply thereafter, closing the day below 98.50 mark. Bears have managed to produce a Shooting Star / Pinbar candlestick pattern on the daily chart indicating a potential trend reversal. Prices should hold below 99.30 to keep the bearish structure intact.
The US dollar index has found resistance around fibonacci 0.786 retracement of the recent down swing between 99.30 and 97.70 levels respectively. If the above structure holds well, bears would remain inclined to drag prices lower through 96.00 mark in the near term. Overall, they would remain poised to break below 94.50 initial support.
The larger degree wave structure of US dollar index is also depicting a bearish story. The index had dropped between 104.00 and 89.20 levels carving meaningful downswing. Further it has retraced the same around fibonacci 0.618 levels around 99.45 mark. High probability remains for a reversal from here towards 89.20 going forward.
Trading plan:
Potential drop towards 94.50 against 100.00
Good luck!
