USD index looks overall bearish since the start of 2017, but current recovery from this year low can differ. In general, we are observing an unfolding impulsive five-wave bearish price movement of a higher degree that still has to develop two more waves.

An impulse is a five-wave movement that indicates the direction of the trend.

USD index, Daily

As we look closer on the 4h time frame, we can see that bullish reaction from February lows can be just a bigger three-wave pause within the ongoing bearish trend. We labeled this pause as wave 4), which is corrective in nature and must unfold a minimum three-wave price movement, before we can consider it as completed. At the moment we see leg C of 4) in the making, which can still seek for more upside.

USD Index, 4h

Wave C is an impulse, meaning it must be consisted of five lower degree legs.

In our case, we see three legs of the needed five already, which means current turn from the high can be an early sign of a temporary correction that may follow. We are talking about wave iv, which can unfold a minimum a-b-c setback back to around 92.40/91.70 region, where Fibonacci ratios of 23.6/38.2 and the upper channel line can offer support and push price higher.

We are also tracking a bullish scenario, which suggests the same swings for the next few days; pullback and then a new high.

USD Index 4h, bullish count