FX.co ★ Elliott wave analysis of USD Index for May 21, 2021

The US dollar index is headed for a test of the support-line near 87.02, this should complete wave v of the decline from 102.99. The big question is of course whether this completes a large A-B-C correction that has been unfolding since January 2017 or this final leg lower to 87.02 only is wave 1/ of a much more impulsive decline? Both options remain valid at this point. We will go more in-depth with these two options in a later post as our focus, for now, should be on the expected decline to 87.02 followed by a rally to 93.11. Only when this rally is complete we need to make up our minds, which of the two options is preferred as the outcomes are very different.

Trading recommendation:

Look for a decline to 87.01 taht should complete the decline from 102.99 and set the stage for a rally to at least 93.11.