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Dollar Index Down; S&P500 Up

Sameer Kapoor 18 October 2012

The Dollar Index extended even lower yesterday, now through the channel support line which puts market into even more bearish mode than before. We believe that wave 5 is underway which should unfold in five waves towards 78.00 projected zone. Any short-term bounce will look for a reversal from a trend line; broken support becomes resistance.

We think that S&P500 will continue higher and the reason is a three wave of a pull-back from latest 1474 high which we know its a structure of a corrective movement. Ideally that was wave 4 of an incomplete five wave rally in red wave 3. If we are correct, then price will move back above 1480 in the next few weeks that will cause even more bearish pressure on the USD.

Forex Analysis by Gregor Horvat at ForexPros. com