On USD index daily chart we can see a big sideways pattern since start of 2015; slow and overlapping price action with a personality of a contra-trend movement that looks completed. We see it as a flat correction in black wave IV; a three wave structure where final wave C should be made by five waves. Well, we have seen a nice decline from November of 2015 counted in five legs, but as an ending diagonal. That’s a reversal pattern that already caused a strong bounce in May, so ideally recent sharp leg down was just a temporary pullback labeled as blue wave two within this ongoing uptrend.
That said we are now looking at a bullish scenario, with more upside to follow. Ideally corrective wave 2 has found its support around the 61.8 Fibonacci region and made new reversal higher into blue wave 3.
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USD Index, DAILY