One of my favorite pastimes is to look at everything in the context of the circle of life – fixed income, equities, commodities and FX. By far the largest and most liquid, the FX market is the real “elephant in the corner” and drives a significant share of the moves we see w/in the entire trading universe.
Attached is the dollar index and a possible count showing the high at 84.76 finishing a 5 wave sequence. The “a” “b” “c” correction unfolding is, still, a bullish correction and one that should find support in the 78.72-80.15 region. The key w/ this chart is the blue “measured move” correction w/ regards to time. Technically, we still have to next week where time and price would be equal. That level is 79.34. Additionally, once we have completed this 5 wave sequence, the corrective move is usually down to the beginning of the 4th wave of a lesser degree.
The only issue that I can see w/ this count is the extended third wave (green). One of the rules of Elliott is wave 4 cannot overlap wave 1 and you can see w/in the fractal of the wave 3 (green) we do have some slight overlap of 4 and 1 (white). In the FX world, I consider this negligible and the subsequent 5 wave rally is orderly and nice.
Last point – I’m seeing the top in/around the 84.76 area as 1 of 5 to come ….stay tuned, if this count is correct the dollar will take off.