Image Source: Pixabay

Dollar has turned bearish after the corrective rally stopped at 105.70-106, an important resistance area at the end of June. Since then, the price even accelerated lower through summer so it appears that a bearish impulse, but with current sharp bounce out of an ending diagonal on 4h TF, we believe that correction is now in play.

Notice that's a very sharp leg up, so its wave a, still first leg of a minimum three leg recovery that can take index back to 61.8% Fib, near 104 for wave "c", which can be very strong resistance for the next sell-off, especially if we consider that this can be wave 2 rally, but watch out for wave "b" pullback in the meantime.

(Click on image to enlarge)

More By This Author:

EURUSD: Sell Rallies
Gold Resumes Its Bullish Trend
AUD/JPY At Potential Reversal Zone