VnForex: U$D Index, Major Bottom Getting Close (Not Quite There)....

The long held, longer term bearish view in the $ index remains in place. But risk is rising rapidly for at least 3-4 months of correcting higher and minimum 5-6 point bounce (and potentially much more), as the market is within the final downleg in the whole fall from the March high (wave V). Note too that the market appears to be forming a falling wedge/bottoming pattern over the last few months, seasonal charts bottom around the mid Oct the timeframe (see 3rd chart below), and time cycles for a number of other financial markets also reverse around that time. This in turn adds weight to the view that a potentially major bottoming is getting close (but not quite there, see “ideal” scenario in red on weekly chart below). Switched the longer term bias to the bearish side on the March “false break” above the Nov high at 88.45, but will be watching for better signs/higher confidence of this longer term bottom (especially as mid Oct approaches) to switch out.

Nearer term in the Sept 23rd email, warned that risk was rising rapidly for a 125-150 tick bounce as the apex of the Aug triangle occurred near that day (often coincides with temp market reversals, see daily chart/2nd chart below) and the market was near term oversold. Took profits on the Aug 7th short at 78.30 there (then at 76.15 for a 215 tick profit). The market has indeed bounced from that day, and on Tuesday reaching the resell target area at 77.30 (145 tick bounce from the low). For now, would use a close above the bearish trendline from July as a sign to stop (currently at 78.00/10), as there is some risk for more topping nearby, but will want to trail stops lower with the market (getting especially aggressive on break below the 75.85 low as further downside may be limited and part of a longer term bottoming). Note that even a break above the bearish trendline from July would not necessarily abort the bigger picture view of another few weeks of wide ranging/bottoming, so would not immediately look to reverse to the long side on such a break above. Nearby support below 75.85 is seen at 76.40/50.