June 6, 2013 in USD
Daily US Dollar Index Technical Analysis
The US Dollar Index has broken out to the downside of the flag that we had highlighted in yesterday’s technical analysis. It has now formed an expanding triangle. Here’s the updated US Dollar Index Chart (Hourly).
There are two possibilities here for the expanding triangle. One is that this is an ending diagonal and the other is that this is a corrective B wave of a larger correction. Either way, the triangle is more likely to break to the upside.
The bullish view is that the correction on the US Dollar Index is complete and a new wave to the upside is in its early phase. For this view to gain traction, the US Dollar Index would need to break out of the upper red trend line in a strong move. It would also need to put in a series of higher highs and higher lows. The 82.50 is providing good support as well. This is lending weight to the notion that US Dollar Index has found a bottom at this level.
The bearish view is that the upside once it breaks out of the triangle would be limited and a new low below 82.45 is very likely. In this count, the expanding triangle is labelled as a B of a correction. This is shown in the above Hourly Chart of US Dollar Index.