Inside technicals and chart patterns by 
The U.S. Dollar has been bouncing as of late. And let’s for the sake of clarity discuss briefly the difference between a bounce and a rally. It’s all in the direction of the Wave.
If the Wave is three o’clock or sideways, then a move higher within that context is simply a bounce.
If the Wave is two to four o’clock, again, just a bounce.
I will refer to a move higher as a rally when the Wave angle is twelve to two o’clock and I will refer to a move lower as a sell-off when the Wave angle is four to six.
Even I will sometimes use these interchangeably but it’s not right and I am writing this as much to remind myself as to you…
So like i said, the dollar had no choice so let’s look at why:
The fact that the U.S. Dollar Index fell to the support of the channel it’s been trading in is certainly reason enough to think that buyers might support the level. Add to that the two to four o’clock Wave and there is market cycle confirmation of a range-bound market. I think the main factor is what I have been calling the floor and the basement.
Prices have reached such levels as to attract bargain hunters. Consider that if we break the "first floor" the basement is next and below that, new all time lows.
I also would factor in the 1.6000 level on the EUR/USD. This level in the fiber is certainly a major psych level that would be resistance. And even on the break up through the "000" (TRIPLE zero!) level there has to be a test to confirm that what was once resistance, 1.6000, is now support. This did not happen so the "000" sent prices lower as sellers push prices lower from this level. Never assume that a break such as this is automatically support. Big mistake.
- Raghee