Based on a complete 5-wave rally from 77.44 AND the extreme sentiment & positioning data that we have been highlighting, we continue to look for a meaningful Wave-(4) correction prior to new gains for the Dollar. The fact that prices broke through neckline resistance is bullish but this is a heavily acknowledged break and therefore could trap late dollar bulls in the coming weeks. Wave-(4)’s are often shallow but long in duration so for now we prefer to err on the side of a triangle consolidation between 83.00-84.50 before a renewed move towards 90. (p1) S/t, the final 5 wave advance from 77.44 has fallen shy of the optimal 85.45 target but rally looks complete with accompanying bearish divergence on the latest new high. There is strong support at the recent neckline break of 83.10 with more critical support at the most recent consolidation between 82.85/81.69. For today, channel & gap support align at 83.55. Levels: Support – 83.86, 83.55, 83.32 Resistance – 84.16, 84.64, 85.42.
Nomura