now the 6th update on the US Dollar
09/12/2017 – since the last Dollar post in May got smoked I stepped back and let this puppy run. I’m still in the “I don’t know camp’ with regard to the dollar finishing a multi year A-B-C advance and this is the beginning of the end for the US Dollar (low probability) OR we have finished a 3 w/ another 5 to go …
but that being said where are we now:
- deeply oversold
- hit a .5 but most importantly the .382 retracement from the all time low
- note a ‘basic’ – not perfect – time cycle working out .. shows “now-ish” to be a potential low and the next move to come?
- RSI is the lowest since the all time low in 2008
- we have measured moves (dashed blue arrows) hitting our current level
so, believe it’s time to watch the USD Rally .. note, in all of the highlighted boxes it took weeks IF not months for the USD Index to consolidate and start moving higher. No reason to believe this won’t happen again as it certainly appears time. Here’s the weekly:
On a MONTHLY chart it’s key to look at the RSI for a hint of the support …
- note the top dashed red line – that is RESISTANCE in, thus far a long term BEAR MARKET in the USD Index. Again – LONG TERM. While we did spike above it briefly, we have still been contained to the upside.
- Note the dashed green lines .. basically, at these levels, the USD (if it was to go up) has found support and began higher. We have a little lower to go (perhaps this will set up a bullish divergence on the weekly) but we are basically at the level where the dollar needs to get going higher or we break critical support …
- the KEY LEVEL in all of this is basically 88-90. If we are doing a 1–2-3-4 then we can’t go below that on a monthly close. That will mean here comes a 5 and the dollar starts up now’ish. If we have completed an A-B-C correction from 2008 (a possible case) then, after a slight bounce, we will penetrate those two read lines and things could get really ugly.
so, if a dollar bull, start looking to work it in around these levels.
05/29/2017 – warning, this is going to get geeky. sorry …
first chart below is of the Euro. Much like the Chief, sure appears that it’s ‘time’ for the dollar to rally. Note below, the time component of the rally off the lows. folks, this isn’t easy and I’ve talked to multiple people this weekend about “is the dollar toast” or is the “king dollar going to roar again”. I DO NOT KNOW … but, in the next couple weeks, w/ sentiment down at 8% dollar bulls we are do for a pause or a dollar rally.
I want to insert this chart on the dollar index, I posted it a couple months ago and it was showing the mathematical harmony. This is important because the ‘high’ that occurred a couple months ago ‘made sense’ in terms of resistance. the math was perfect …
but here is the rub … have we completed an Elliott Wave corrective A-B-C and the dollar is toast OR are we correcting 4 of 5 right now …?
So, if you read below we looked for May 2017 to be a cycle and so far it has worked … that being said, I apologize again but I need to go do a little “Elliott stuff” to get a picture for the roadmap.
Some background: I am a CMT and w/ that designation comes a modicum of understanding of Elliott Wave. (it’s a requirement) That being said I also trained under the Master Constance Brown (http://aeroinvest.com/) not once but twice! (she also told me at one point to never count a wave again ) … to add to that I actually taught the CMT (i) Level III Elliott Wave online to hundreds of students. What’s that mean … I love Elliott Wave – when it works! (Work w/ me folks, that was supposed to be funny.)
Elliott Wave rules of the road:
- Trust and do not break the RULES. There are only 3 ….
- Wave 3 can’t be the shortest
- Wave 2 cannot go below/above Wave 1
- Wave 4 cannot overlap ANY of Wave 1.
- Master the corrections …
- Triangles, Flats, Expanded Flats, Zig-Zag, W-X-Y, double and triple threes
- Learn to recognize B waves .. (hint – they are always 3 waves)
- Learn to recognize a 3rd of a 3rd (read: thrust)
- Learn to use and trust LONG TERM (monthly and weekly) Elliott Wave counts … intraday is hard as hell.
- DO NOT USE Elliott in isolation …ever. use a MA, oscillator, price targets, RSI, etc. etc.
So, there you have it … it’s a very helpful tool (that’s all it is) and it’s NOT the panacea. it’s a tool folks …
but, it’s important right now w/ regard to the dollar index.
here’s the BEARISH VIEW – we finished an A-B-C correction (note on the cycle month) and down she goes …
here’s the BULLISH VIEW – we just finished 3 and are correcting in 4 and a new high on the USD is to be made w/ a 5 up ….
so, here’s where I really think we are:
- I want us to notice the 3rd of a 3rd action below. That certainly makes me think we just finished the 3 ….
- Note the ‘range’ transition that occurred w/ the RSI – if we are patient enough on a LONG TERM charts the RSI will ‘tell you’ when it moves from the bearish to bullish ranges or vice versa. in this case … believe we moved up into the bullish zone and the dollar will, in due time, continue to advance higher after this correction (is it ending?)
- Dollar Bulls are at 8%
so, in conclusion, I see patterns and sentiment that call for a dollar low/rally. as this rally progresses it will take on 5 waves or 3 waves and then a PATTERN to SELL DOLLARS will appear. IF it fails THEN the dollar rallies and IF it works then the dollar fails and we could be at the A-B-C TOP and the dollar is really really going to take it on the chin.
It’s all probability folks … that’s all it is. I HAVE NO IDEA which way it will go and really don’t care. Give it a shot and use a stop.
05/17/2017 – well here we go … as you will see we are sitting on the BOTTOM of the BUY RANGE PATTERN that we have been waiting for….some STRONG THRUST DOWN so that begs caution. BUT, note the TIME component of the 3 drives the symmetry is pretty awesome.
so – pause/wait and IF the dashed red trend line is taken out to the upside on a WEEKLY CLOSE (98.50) then perhaps the next big run has begun.
05/07/2017 – Happy “insert name here” day … have you noticed that Social Media is making a “insert name here” day for everything? So, for me, I say “Happy Dollar Index Update” day … as an FYI, that’s May 7, 2017.
Anyhoo – man this is getting interesting. I’ve updated both the 4 hour and the monthly since Plaza chart below.
Let’s pay attention to 3 things:
- the level shown back on April Fools Day is now even more important. As you can see below, we now have 2 projections into the same area, we have a 3 drives to a bottom forming and have added another ratio to this area. WOW ..kind of important.
- on the monthly, notice the blue rectangle w/ time above/below it. That represents, in months, the EXACT time it took to rally after falling from 164 and it hit – exactly – from the rally low in 2008 to now. The key here is that it hit right at a very powerful PRICE relationship. it was an exact 1.618 price projection relationship. Very well could have finished A-B-C Elliott Wave correction – we simply don’t know yet … is this a 3 or a C. (that’s the big deal)
- also, on the monthly, note the cycle we started from 1985. It’s smacking right into May (now) and so …it DID NOT rally up into the ‘target zone’ ID’d and it’s finishing an important BUY pattern in the 98-99 area. IF THIS HOLDS and rallies us UP into the target zone we still have to consider this to be a BIG resistance area ALONG w/ time so …
W/ all of this going on AND w/ the French doing the elections right now believe this will resolve – SOON.
WATCH 98-99 level for the first chess move to occur … hope this helps.
04/01/2017 – Happy April Fools Day!
per below, the US Dollar Index smacked right into our target …but, the PATTERN certainly looks like one more wave ahead. Then, well, things are going to get really interesting! Next stop is more than likely 106-108 on the index.
it’s quite clear to see 5 waves completing up into that area …
also, was ‘hoping’ for a deeper correction as shown on the dollar index but the ‘fundamental frequency’ stopped it and, for now, probability says a low is in place for the USD and it should vault higher in the coming weeks.
one last, on the chart below, note the cycle tops from 1985, 2001 line up in May 2015.
Going to get really interesting.
1/14/2017 – if your into harmonics and patterns, then read below. If you just want the bottom line up font (BLUF) then read this: WAIT to do anything on the US Dollar.
Obviously, I’m “called” or “attracted” to a movie like this because of the amazing synchronicity to ‘string theory’ and ‘time’ … so if I really want to go ‘deep’, so to speak, I will play a soundtrack like this w/ only this music in the background and a chart …
what’s most important .. ? where are we now ..,
- there is BEARISH RSI divergence on the monthly
- the TIME component (a big deal) is EXACTLY equal to the last major rally in the index since the Plaza Accord
- the most recent high is a 1.1618 projection and EXACTLY .786 the rally from 1995-2201 – EXACTLY
- we have RECORD NEGATIVE/BEARISH sentiment for the EURO (a major component of the index)
- see blog and note the cycles on the POUND and the AUSSIE and LOONIE
- note: the RSI ‘transition’ to higher support zones … that’s bullish
So, UNFORTUNATELY, my friend we need to WAIT and IF (the big IF ) every thing is to come together then we should see support come in around 92-95 to get long on the dollar.
PS – you read it here … I’m REALLY ‘believing’ (not supposed to do that) that the $$$ will find support in/around the areas sighted below. BUT .. if you try and SEE the picture that’s painted .. this COULD BE A MONSTROUS $$$ TOP. How will we know …. no flipping idea. You guys/gals tell me ….
12/30/2016 – updating the US Dollar Index post
- bearish divergence – check
- 1.618 price projection hit – is this an a-b-c correction and the dollar has peaked? Potentially … or is wave 3 of 5 concluding w/ a pull back imminent?
- SENTIMENT is extreme bearish for the EURO and GOLD
- note – we are hitting the same TIME correction in a couple days as the move up from 1992-2001
- Economist .. the best contrarian indicator out there.
CLIFF NOTES: if you read below you’ll see there are other targets higher. We are approaching the same TIME as the last move up in the dollar against the smash from the Plaza accord so the ‘no brainer’ long dollar trade is one that begs of caution. Is this THE top in the USD and now we go back below 70? Don’t know, but a preponderance of evidence suggests STIFF resistance from now into January for the USD.
11/19/2016 – if you want to follow the Dollar posts, just search dollar on the top right area of the blog. the overall thesis, which has proven to be correct so far, was the dollar was going to strengthen all the way from the low 70’s. it’s been a nice run …
is there higher to go … yes.
but then …
here’s the picture – note, I’ve used the high from the Plaza Accord in 1985 to put the .382 retracement on the chart. That also overlaps w/ some nice other extension and retracement ratios. Believe the highlighted area in/around 107-108 is going to be key.
also, note the TIME component between the last major rally from 1992-2001. Next month, or, depending on how you draw the time component, perhaps January the Dollar Index should run into some pretty stiff resistance in TIME.
last thing is the Elliott Wave count … I always tell people – I LOVE Elliott wave – when it works. here, the count has been pretty much a “Ray Charles count” on a long term basis. I’ll try to walk you thru the importance:
- market corrects in 3 waves labeled a-b-c
- the market moves impulsively in 5 waves
- wave 2 can’t overlap the beginning of wave 1
- wave 3 can’t be the shortest
- wave 4 can’t overlap the beginning of wave 1
- if you take the low in 2008 and start working your way up we see that we are ‘clearly’ creating 3 waves into yesterdays price action.
- here’s where it gets tricky .. simply, I don’t know if this an a-b-c big corrective move OR we are impulsively going higher in a 1-2-3-4-5 sequence.
- the key here – wave c (of a-b-c) always has to be 5 waves (unless in a triangle)
- so if you look you can see the ‘small’ 1,2,3,4,5 being carved out (Turkey reference) so the blue highlighted area 107-108 COULD be the end of a C wave and the entire A-B-C move OR the end of wave 3 and we correct 4 and then off we go again in 5.
I honestly have no idea ….
Here’s what the charts are SHOWING US:
- square root target
- the ‘time’ of the last corrective move
- the ‘count’ showing we are in the 5th wave of C and 3
- EXTREME sentiment for a strong dollar
- the .382 from the all time high
- divergence set up on Monthly RSI
- ‘other’ extension and retracement targets
Expect some major resistance .. again, we are 6 handles away from the target area and that represents HUGE moves in currency .. BUT remember, right now, we are at extreme (not historic) but extreme sentiment and this has never proven to be wrong from a contrarian indicator. This puppy could snap back on you really really quick.
only TIME will tell … let me know if you have any questions.