Time’s Up For The Dollar Rally

By Alexandros Yfantis of Trading2Day

Alexandros Yfantis • Oct 3, 2017 at 7:52 AM EDT

Is the Dollar index about to resume its bearish trend towards 90 or lower?

Has the bull run in the Dollar index reached its peak? Is the Dollar index about to resume its bearish trend towards 90 or lower? I believe that there are increased chances the answer is yes to both questions. Why? Since the 91.50 low on September 20th, the Dollar index has completed 5 waves up. However the price action prior to the 91.50 is a two wave pattern, with the first wave up clearly a corrective zig zag pattern.

(Click on image to enlarge)

The rise from its yearly lows at 91 is clearly a 3 wave move to complete wave A. The decline towards 91.50 from 92.66 wave A high is also a 3 wave pattern labeled wave B. We are now at the final stages of the 5th wave if not already complete. This wave formation is a classic corrective pattern and once it ends, the previous trend resumes. In this case, the longer-term trend was bearish.

(Click on image to enlarge)

In the daily chart price is below the Kumo (cloud) and inside the bearish channel. Price has bounced towards Kumo and channel resistance and I expect to see a rejection, based on my previous wave count shown in the 4 hour chart above. The rejection should lead to a decline in the index towards 90 or even lower.

This is my primary scenario on what to expect from the Dollar index.

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