If you look at the weekly or monthly chart you can clearly see that the price has been in a Bearish channel since 2008 and each time the price reached near either the upper or the lower line of the channel, it bounced back again to the Large channel. It may be interesting for some of you to know that it took 7 years – from 2001 to 2008 – for the market to make that Bullish move and from 2008 until now – a little more than 7 years – to correct that move. Also according to the data I have got there is another 7-years Bearish trend from 1994 to 2001. If we consider these valid cycles, we can suggest that there are 7 years apart from each major low and major high and 14 years between two major lows.

As you can see, there is a channel forming in 4H chart. The price is moving between the upper and the lower levels of the channel. Although the lower line has been broken, the price could not maintain its bearish move and bounced back, therefore it serves as a good support and resistance range that the price is most likely going to be traded in. In addition to that we have another minor channel within the main channel that can guide us to anticipate more accurately when (or if) the price going to turn back.

We can also see in the Dollar Index 4H chart that the price has tested the 100 level three times and failed to break that level, indicating a strong resistance level. MACD also is showing divergence between the two tops, which indicates that the price is most likely to fall.

In addition to what has been said, we can use Fundamental tools to make a better estimation for timing the breakout. If you look at this week’s economic calendar you can see that there is no major news. Friday 29th has the most potential to be a breakout day.   

In regards to the possible direction of the market, it is more likely to move downward in a minor channel in the early days of this week and eventually build up towards the upper line (on 27th and 28th January) and possibly we will see a breakout in Friday 29th.