Since February 2018, and during this year Dollar Index (DXY) has been developing a rally. The upward cycle has advanced over 11%, from the lowest level touched on Feb.15th, 2018. From September 2018, DXY has been moving sideways in a corrective structure.
A Call for Fresh Highs
In the last breakout on April 24th, the Greenback activated a new motive wave. The bullish cycle has a first potential target area between 98.50 to 98.97. The invalidation level is below 96.75.
The Correlations and the Exhaustion Area in US Dollar
Correlations can be used in different ways. The exhaustion area is a potential zone where the price could make two options:
- Impact and start a consolidation structure to continue the main trend.
- Once reach the area make a reversal sequence changing the original trend.
The end of the bullish cycle in DXY suggests the end of the bearish cycle in EURUSD. Observe the price action in the bearish channel, the test of the base of the bearish channel could indicate a potential bounce.
Another situation is the move in USDJPY pair observed on Wednesday trading session. The bullish move suggests the fifth wave completion and a “playground cleaning” to make a deep correction.
Remember that the price is not compelled to move as our forecast implies. The charts released corresponds to the Elliott Wave Theory application.