Technical outlook and chart setups:
The US dollar index finally pulled back as expected yesterday. It had dropped lower towards 97.50 levels forming the first leg for a corrective drop. The index is trading at 97.80 levels for now, looking to drop lower further towards 97.00 levels at least. Additionally, 97.00 is the Fibonacci 0.382 support as depicted here. It seems that the index has completed wave 3 within the 5 wave rally expected from 94.50 levels. The current pullback would be considered as wave 4 which is likely to terminate at 96.95 levels. It is hence recommended to exit long positions and remain flat for now. Aggressive traders can go short now, with stop at 98.50 targeting 97.00 levels. Immediate resistance is at 98.13 levels, while support lies at 96.95 levels.
Trading recommendations:
Remain flat for now. Aggressive traders can remain short, stop at 98.50, target 97.00
Good luck!
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