Technical outlook:

The EURUSD pair reversed just about from the desired resistance around 1.1950/70 levels discussed yesterday. We are getting more confidence in the continuation of bearish price action looking at the 4H and Daily charts now. Today, an evening star candlestick pattern could be in the making on the daily charts and a drop below 1.1840/50 levels would be encouraging to hold shorts further. As the wave counts suggest, an intermediary downtrend is formed after a potential leading diagonal setup between 1.2090 through 1.1550 levels, followed by a counter-trend rally unfolding into 3 waves a-b-c through 1.1960 levels yesterday. If this count holds to be true, the next high probable trade direction should be on the south side and a break below the counter trend line support would confirm that bears remain in control.

Trading plan:

Please remain short for now, stop above 1.2092, target is below 1.1500

US Dollar Index chart setups:

Technical outlook:

The US Dollar Index is finally looking to have bottomed out at 92.50 levels yesterday. Please note that the index has bounced right around the Fibonacci 0.618 support as presented here. Moreover, it is also within the vicinity of the previous wave 4 and also past resistance turned support zone. All the above convergence points and the follow through rally yesterday, are indicating strongly for a continued push on the north side for the US Dollar Index. The wave count also suggests that a neat little up Gartley is formed with an impulse rally earlier, followed by a counter-trend drop a-b-c. If this count holds well, we should witness a good rally extending up to 98.00 levels going forward. Strong price support is seen at 91.00 levels, while resistance around 94.20 levels respectively.

Trading plan:

Please remain long now, stop below 91.00 target above 95.00 at least.

Fundamental outlook:

Watch out for USD Advanced Goods Trade Balance around 0830 AM EST.

Good luck!