US Dollar Index in high probability harmonic zone

US Dollar Index is at an interesting juncture for a trade setup using harmonic pattern rotations.  The bigger picture, in this case I’m using a Day chart, shows price is testing a significant level 81.770 as resistance and holding above 81.170 significant level as support.  This creates a range to break and hold for increased probability in directional bias.

View photo

20140812 DXMTS 1024x638 US Dollar Index in high probability harmonic zone

US Dollar Index in high probability harmonic zone

 The left chart is the Day chart (^USDOLLAR:DJI), the right chart is an intraday perspective, I’m using an STRenko 20 Bar size.  The intraday chart shows price has upside bias but there’s a potential pull back to test 81.366 to 81.352 region.  So a test of this area or a close and hold above 81.705 offers a long opportunity to the top of the PRZ, as shown in red, at 82.053.  Above 82.053 has the ideal target for long term at 893.460 and scaling points at the intraday ABCD extension levels 82.486 and 83.224.
If price holds below 81.352, this increases the probability of testing 81.170 or lower, currently I’m looking at the 80.700 region as the next key support test below 81.170.  So failure to hold above 81.705 offers an intraday short opportunity to the support test targets of 81.570 and 81.352.
Here’s the thing about harmonic PRZ’s, as shown with red zones, once price is inside them, I view this as a range area and it’s not until price can hold beyond the zone does it offer a higher probability trade entry with a conservative nature.  Once the break of a PRZ or a Significant Level, a conservative entry is a return to the level for a validation test, this takes patience, then the targets set by symmetrical and geometrical moves aka Harmonic Patterns, offer scaling points when in a position or a potential rejection point for a possible reversal trade entry.  So when price nears a target, protect an existing profit by honoring stops or prepare for an exit or reversal entry.


View Comments (0)