Do you remember this Harmonic pattern on the US Dollar Index? You can see our first analysis Dollar Index Heading for a Bearish PRZ and our second analysis, Dollar Index Rejected From PRZ, on this matter.
Looking in the same time at the charts of Dollar Index and EURUSD we will see that they are in a mirror and when a top is made on EURUSD, in the same time, a bottom is made on the Dollar Index and the other way around. The coefficient correlation indicator it is at -0.9357 meaning a very good inverse correlation.
At this moment we might have a pretty nice situation. The Index has made two lower lows; the last one touched a key support level, and one lower high. The last local high cannot be considered another LH if the down trend will not continue. EURUSD has made only one higher high and one higher low, after that it has consolidated in a 200 pips range between 1.30 and 1.32.
Taking in consideration a continuation of the current trends, since we do not have motives to think otherwise, we can say that a break through 1.32 on EURUSD should be accompanied by a drop under 81.40 on the Index. The upside target for EURUSD is at 1.34 while for the Dollar Index is at 80.80.
On the other hand if the range will continue then the probability for a down break will rise and don’t forget to keep an eye opened for a false breakout.