if you have been following my blog, you’ll remember the big measured moves that were around when the dollar was carving out THE low. they have appeared/are appearing again. w/ a wrinkle … using “basic” monthly cycle tools you can see that we have a BIG cycle coming in this month which lines up w/ the measured move target zone a little lower in the index. this could be a BIG DOLLAR MOVE higher ….
below you’ll find the chart that started the dollar bears growling and stopped the dollar bull in it’s track. the form, proportion and balance are amazing and exact. take time to study this chart
since then, the USD Index has basically been carving out what looks like a flat correction and then higher … you can read prior posts to see if this was an A-B-C correction or 1,2,3,4 (in work/finishing) and then higher in a big 5th wave. we are getting a little below the end of wave 1 which breaks a rule if your a purist but it sure looks like we are bottoming. then, the last chart is an intraday chart showing a possible mathematical derivation of wave length based on fibo relationships that could get us into the target zone … so, stand by, as this is a BIG level coming up on the USD.
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.