Easily pushed passed the 161.8% extension level of 97.62 yesterday. We are still cautious around these levels as signals are overbought but dips continue to attract buyers. Measured move target is at 98.44. Current price is at 98.00.
Is the Dollar Index overbought?
Monthly – Still holding Inside Bars on the monthly chart highlighting a degree of indecision. Reverse trend line resistance is seen at 104.60, close to the overnight high.
Weekly – Although we have completed a bearish five-wave pattern (Elliott Wave), there is little in the way of bullish reversal patterns. In fact, a stall at current levels and we could be forming a bearish descending triangle formation with solid support seen at the 100.00 Big Figure.
Daily – Very messy outlook. Are we in a bullish corrective channel formation OR a descending triangle formation? This timeframe really gives away little.
Intraday (4-hour chart) – Stalled very close to the 261.8% extension level of 104.69 (from 100.08-101.84) and we look to be forming an Ending-Wedge pattern. Price action inside this formation is expected to be mixed and volatile until we breakout. Trend line support is at 103.50, bespoke support at 103.56.
The six-, four- and two-hour chart highlight a bearish Outside Bars. There are two ways to play this outlook. Either sell rallies close to 104.20 with a stop above 104.70 or sell a break of 103.50.
Management and risk description
Entry: Either sell rallies close to 104.20 or sell a break of 103.50.
Selling at 104.20 stop above 104.70. Selling a break of 103.50 stop at 103.90.
— Edited by Martin O'Rourke
Non-independent investment research disclaimer applies. Read more