The Dollar Index after having topped 82.55, has now made an initial pull back towards the 23,8% Fibonacci retracement and is now re-testing the highs. We do not think the correction is over and we believe there is more downside to come.
The short-term resistance is found at 82.50-60 and short-term support is found at 82.25 and 81.95. We believe that prices are going to end the downward correction near the 38% Fibonacci retracement. The move from the lows at 80.75 is a three wave upward pattern and we now need the 4th wave correction to come and then the 5th wave to end an impulsive move from the lows. The alternative scenario will be that prices have already topped as the three wave pattern looks complete. So the alternative implies that we will not see higher prices than the recent high.
Prices have retraced the 38% of the entire decline from 84.75 to 80.75 and this shallow retracement also coincides with the strong resistance found at 82.50. As it was said above, you can see in the daily chart above that the upward pattern is in three waves now. The next couple of sessions will clear things up regarding which scenario will prevail. Concluding we are slightly bearish below 82.60 with 81.90-82 as a target.
