The main characteristic in the price action of the Dollar Index is the fact that it is moving upwards in an impulsive wave formation rather than a corrective one. This confirms our view that it is very possible to witness a trend reversal and that the upward move will continue higher to challenge the med-term trend. Prices as shown in the daily chart below have clearly broken out the downward trend and are above the resistance trendlines.
Prices did not retrace more than the 100% of the upward move from 80.50 to 84.75 and are now starting to unfold a higher highs and higher lows sequence that confirms bullish trend even in the daily chart. Resistance trendlines have been broken and there are a lot of good chances that this upward move will continue higher.
Currently, the Dollar Index is trading sideways and in overlapping corrective pattern. We expect that prices could be heading towards the 38% retracement, where they will find support. Breaking above the red downward sloping trendline resistance will confirm that a new smaller degree upward move is starting at 82.45-60 as a target. Concluding, we remain bullish after our buy signal at 81.65 was broken. The upward move is unfolding into a 5 wave move that implies more upside potential for the Dollar Index.
The material has been provided by InstaForex Company - www.instaforex.com
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