The Dollar Index has finally reached 82.10 and the area of 61.8% Fibonacci retracement of the move 80.50-84.75. As we were saying for so long in our previous posts, the downward correction that started at 84.75 was not over yet and the most probable target to end the correction was the 82.10 price level. Finally yesterday prices reached our target and even a bit lower.
The correction could very well be complete. The downward move is overlaping and I give more chances to the scenario that this downward move is corrective and that trend is going to change to up once again. Short-term trend, however, remains down. Resistance is found at 82.40 and 83.05. Support is found at 81.80. We expect prices soon to form a bottom and see an upward reversal. Our longer term view still remains bullish as long as prices trade above 80. However, if investors choose to enter long here, the only correct top now would have to be the low of the entire upward move, the 80.50 price level. Our strategy, however, requires more patience. We would like to see an upward impulsive move and a break of resistance in order to enter long with the last low as stop.
For the short-term trend to change to up as per our analysis, we will have to first see an upward break of the 82.40 short-term resistance. The upward move will need to be impulsive and not overlapping in order to support our view. Next important resistance that must be broken is the 83.05 price level (intermediate high). Breaking above that high would decrease substantially the chances for most bearish wave counts and scenarios, increasing at the same time the chances for the bullish scenario which is our primary choice.
Concluding, we are starting to look for bullish signs of reversal as the target area for a corrective bottom have been reached. We start adding to longs when prices break above resistance levels and we use the last low 82.04 as stop.
