The Dollar Index is on consolidation mode right now, looking very bearish on a daily chart. It’s grappling to get its sea legs in this slow market climate. Some analysts have proposed that the index is creating a triangle pattern, which could point to indecision among traders. The Dollar Index is approaching the top of the resistance range set by the swing high on May 28th. This new expansion has fueled a fever pitch of interest in its future movements.
Traders are already focused manically on the Dollar Index. Comparison of the 5th wave with its own 3rd wave Creating a 1,2, 1,2, bear type of pattern for 5th wave … spx. This trend is troubling for the index’s overall upward trajectory. The trend we’re on right now hardly produces any movement at all. This could lead to a wait-and-see attitude in future sessions.
The consolidation phase suggests that the Dollar Index may remain within this range bound pattern for another session or two. From there, ideally it attempts to push above important areas. The early strength seen in the index looks to be fleeting, with traders seemingly still very gun shy in their positioning. This feeling would fit right into the overall bearish sentiment that’s currently engulfing the index.
Traders and analysts alike have been focusing on the chart showing the Dollar Index’s present head and shoulders configuration, found here. The graphic depicts that new triangle shape that’s beginning to form. This particular shape often shows a period of consolidation that can typically precede either a bullish breakout or a bearish breakdown.
Many market observers are of the opinion that how Dollar Index performs over the next few days will be decisive. This will be central to determining how it moves forward. If it is able to push past the resistance down from the May 28th swing high, that may signal a change in momentum. Stay tuned for this important development! Inability to overcome these levels could strengthen bearish sentiment and extend the consolidation phase.