The Dollar Index (DXY) has gained nearly 0.6% this week after falling short in the three weeks prior. The greenback has dragged the major currency pairs along as it sheds some profit on Wednesday leading to a bearish correction. Let’s take a technical look at some of the major pairs for the second half of the week
Dollar was bullish in the hours leading to the London opening on Wednesday. DXY hit 93.6 – its highest in nearly a week. However, shortly after the London session kick-started, it shed all of the profit to hit its lowest of the day. Meanwhile, market volatility is quite low and is most probably looking forward to the New York volume. DXY is back to 93.5 while EURUSD bounces from 1.172. The Sterling has been the biggest mover so far. Brexit optimism supported bullish actions on the GBP pairs as the market look forward to tomorrow’s important brexit event.
In the commodities market, Gold is back to 1900 and is about to get deep into the 1900-1905 important intraday price zone. Oil (WTI) continues to gyrate between $39 and $40 as it gears to continue the recovery that started on Monday. Bitcoin bullish momentum stalls. The crypto falls short of the $12,000 level after impressive moves in the last week. Wallstreet sheds profits ahead of New York opening.
DXY technical analysis: long-term view
As the chart above shows, DXY looks to support more shorts ahead of the November 3 elections. From the Elliott wave perspective, the long-term 4th wave ended at 94.7. The 5th wave is in motion, with potentials of hitting 90 in the coming months. The first sub-wave of wave (5) seems to have ended. The current rally should be wave 2 of (5) as the short-term wave analysis shows below.
The current intra-day dipmight therefore go lower to 93.35-93.2 Fibonacci zone before the bullish corrective wave 2 continues. This can also be seen across the major pairs especially on the euro-dollar pair.
EURUSD technical analysis
EURUSD paints an inverse image of the DXY. The long-term 4th wave ended at 1.161. Wave 1 of (5) ended with a diagonal pattern at 1.183. Wave 2 is emerging and we would most likely see it decline lower 1.1685. If the price remains above 1.183, a return to 1.18 should see the currency pair up toward 1.22.
GBPUSD technical analysis
The Cable seems to paint a different picture. This is quite possibly as a result of the post-brexit trade deal negotiation. Earlier on Wednesday, the UK calmed down fears of a no-deal brexit after initially setting up October 15 as the deadline day. This now means that even if the October 15 negotiation goes south, talks will be ongoing to discuss the future of the UK and EU relationship after brexit. The chart below looks quite bearish.
GBPUSD completed a bearish impulse wave at 1.2675. The 3-wave bullish correction that followed ended at the 50% Fibonacci retracement of the decline from 1.298. The big fall has most probably given an initial confirmation that the correction has ended. However,a break below 1.286 would give the final confirmation as far as this Elliott wave forecast is concerned. Below 1.286, there is a high likelihood of further decline toward 1.23. Meanwhile, forecast will go in line if Brexit talk is not concluded on Thursday. On the other hand, a successful deal should project the Cable toward the 1.2985 top.
USDJPY technical analysis
USDJPY should continue the bullish resurgence from 104. After completing a bullish impulse wave needed to get out of the bearish shadow, the pair is now making a 3-wave bearish correction as one would have expected. Unless a fast dip below 108 happens, the dollar yet should continue upside after completing the current bearish correction.
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