The dollar index TVC:DXY may rise into the 103-104 range in the third quarter, as it has broken a resistance at 101.
The index managed to stay above a rising trendline, increasing the chance of the uptrend from 73, or a bounce from 96, to extend toward 107, as pointed by a short falling trendline.
Considering that a five-wave cycle from 71 has completed, the current rise could most likely turn out to be a decent bounce.
Wave pattern suggests the progress of a wave (x), the fourth wave of a double-zigzag. This wave may end in the range of 104-107, to be reversed by a downward wave (c).
On the daily chart, a bullish inverted head-and-shoulders has been confirmed, suggesting a target around 105.85. Wave pattern indicates the development of a wave c, which closely observes a series of projection levels.
Given that this wave has travelled far above its 61.8% level of 100.76, it is highly likely to extend to 102.71. A break below 100.76 will not only trigger a fall into 99.56-100.16 range, but also make the inverted head-and-shoulders temporarily invalid.
* Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.
** No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.