Good morning traders! Hope ya'll had an awesome weekend, let's get going.
The dollar index has been in a strong downtrend through December and till mid of January when price found a base. The most common question that is, is " Did Dollar bottom?" Well, based on the EW theory we have to respect the price structure and sub-waves before we may come out with a conclusion about the next probable move. Notice that on the 4h chart below we are tracking wave five down from 95.14. It is a motive wave that must be made by five sub-waves, so more downside can follow since we do not see five sub-waves down yet. Also, notice that current recovery is made by three legs and has retraced back to former wave four and back to channel resistance with 38.2% bounce against sub-wave 3. Technically speaking that's an ideal resistance/reversal zone so we will not be surprised if the dollar will start turning down once again, from wave four into the fifth wave of decline. At the same time, euro, of course, may continue higher away from 1.2200.
