USD INDEX Is Setting Up for Potential Decline

The decline from 99.66 unfolded as a leading diagonal structure, labeled i-ii-iii-iv-v. According to Elliot Wave theory, leading diagonal always point toward the direction of the major trend.

Also, once a five-wave impulse is completed a three-wave retracement follows. In the Dollar Index case, the corrective pattern seems to be unfolded as a w-x-y double zigzag and has fulfilled the requirement.

Confluence that the price is also sitting at a resistance zone and approaching 78.6 Fib, a bearish reversal is imminent.

While the 99.66 invalidation level remains intact, watch out for bearish price action signal from the resistance zone. The breach of the Flag channel or blue horizontal line will confirm the bearish setup.

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