USD Index 4H chart 7:38AM EDT 6/22/2012

Risk has been turned off this week, and we have seen the USD pare its June losses. In fact, the 4H chart shows that the US index has completed the correction pattern formed in June after price pushes above the channel resistance during the 6/21 US trading session. This rally also pushed the 4H RSI back above 60, and prevented the market from developing persistent bearish momentum.

As the market gears up for the 6/22 (Friday) US session, the rally has stalled under 82.70. Did we complete an ABC correction? Or will risk off push the USD index back to the June highs near 83.60?

In the 1H chart we see a bit of a bearish divergence. But if we fall and the market rebound from above the 82.28 pivot, we have a clear bullish structure. Otherwise, it would be less clear, but still, if the market remains above the 82-82.10 area that includes a previous resistance pivot and the 200-hour SMA, we might still be in a bullish outlook.

A break below 82.00 flattens the market with no clear sign of direction and thus reflects sideways and choppy consolidation.

USD Index 1H chart 7:43AM EDT 6/22/2012

Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

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