The Dollar index has staged a huge rally in 2014 from 79 to 101 but for the last 3 months we observe a corrective pull back after the parabolic rise in the index. I believe that the upward move that started last year is not yet over and we should expect new highs this Summer for the Dollar index towards the monthly 61.8% retracement from the July of 2001 highs.
The Dollar index has already made a 3 wave pull back towards the 38% retracement of the rise from 78 and I believe the up trend will resume shortly into new highs above 101 this summer. Important level that bulls will need to break is the 96.10 low made on March 2015. On the other hand bears will need to break below the recent low at 93.10 in order for an impulsive wave down to form.
Zooming in we see the form of the decline was a downward sloping wedge that was recently broken and the Ichimoku cloud resistance was also broken. Bulls made the first step for an upward reversal as price broke above cloud and out of the wedge pattern. The index has made an upward impulsive move from 93.10 to 95.85 and is now making its first pull back. This is a buy opportunity in my opinion with 93.10 as stop.
Major fx pairs are also showing signs of reversal and breakout patterns that are expected to push the dollar higher.
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