The Dollar’s rally during the first half of 2022 played out mostly as we described in the post, although it was more energetic than what we expected. The index worked quickly to challenge the first major target of 102.5 and has now moved into a higher range of target resistance levels near 113.75 & 118.25.
This means we think that the Dollar is overbought here and a correction is in due. However we also note that our preferred momentum indicator has not yet registered a negative divergence on a weekly time frame against the steep rising price.
When trading inside an Elliott wave correction, it’s important to speed up your trading time frame. You can expect to play for smaller moves that don’t last very long. Potential Dollar bears might find that price action is choppy above support at 102.16, and a break of that level might result in a faster trip down to 99.46 or even 97.34.
We still think the Dollar Index pattern calls for another attempt at a high later in the year or early in 2023.
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