USD index is back at the highs as EURUSD broke lower this week, so we see index back in bullish mode. An updated wave structure on 4h shows idea of an extended wave 3) headed up to 99.00 area this month. If that's the case, then this is still only a start of a big bullish breakout based on our prediction on higher time frame charts, where we expect a break up into a wave five.
USD Index, 4H
Regarding the Daily time frame of USD Index, we can see a big sideways pattern unfolding 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 turn down was just a temporary pullback within a new ongoing uptrend labeled as blue wave 2-circled.
That said we are now looking at a bullish scenario, with more upside to follow into blue wave 3. If for any reason price continues to trade beneath the 95 area, then the correction in blue wave 2-circled could still be undergoing.
USD Index, Daily
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