The U.S. Dollar Finds Support Again But No Confirmation Of A Bottom Just Yet
The DXY once again found a local bottom this week near the lower end of the support zone for the potential wave B as shown in white on the charts. While this turn-up off of support could certainly turn into a larger degree wave B bottom we still need to see further upside follow-through to give us initial confirmation that this is indeed the case.
I would be looking for the DXY push higher and develop a full five-wave move up off of the 89.93 low and move up towards the 92ish area to fill out a full five-wave pattern for a wave ((i)). This should then be followed by a corrective retrace for a wave ((ii)). This pattern would then give us the setup we are looking for to give us an initial signal that the larger wave C up has begun.
If we are unable to see follow-through as noted above but rather turn back lower and break under the 89.93 level followed by a move through the 89.68 support level, then it would begin to shift the odds to the red count that I have been laying out as an alternate for several weeks.
That red path would still allow for another lower low in the form of a wave ((v)) of C of (A). I do think this alternate red path is less probable due to the size of this potential wave ((iv)) in comparison with the wave ((ii)) of the same degree, but I can’t fully rule it out until we see a full five up off of the lows as noted above and see a push through the 94.59 level overhead.
Bigger picture, once we fill out the wave B of of (B), the larger wave C of (B) should ultimately target the 95.96-101.31 zone before turning back lower again to finish off the wave (C) of the larger wave ((B)) which I am showing on the weekly chart. Support if we do indeed make another lower low would initially come in at the 87.3 level with the 86.18 level acting as support below that.
So we are still following the expected path up off of the lows but if we have indeed topped in the wave A of larger wave (B) we should expect that wave B of (B) to take a bit more complex pattern but as long as we hold the 89.68 support zone I do expect to see further consolidation and push higher in the DXY towards the latter part of the year