Dollar ready to turn bullish: Elliott Wave

USD  Index Weekly

The U.S. Dollar Index (NYBOT:DXH14) has been slow, choppy and overlapping within two contracting trendlines for the last few years, which we think represents a triangle pattern, most likely placed in wave B) position. The reason is a five wave rally in wave A) from the 2008 low, which is the first leg of a three wave A)-B)-C) recovery. As such, we will be looking up in wave C) after a completion of a triangle pattern. For now that's not the case, as we will need waves D and E before we may turn immediately bullish. In the next few weeks we expect a move up in wave D up to the upper trendline of the pattern.

USD Index Weekly Elliott Wave Analysis

USD Index Daily

We believe that USD Index has turned bullish after an impulsive rise from 79.00 at the start of November. This structure is important for a change in trend, even if just temporary. Based on a big picture with a triangle, we think that a rise from 79.00 is the start of a wave D that will unfold in three legs. If that is the case, then recent downward move was wave (B) correction completed near 79.45. As such, a move up in wave (C) seems to be underway toward 82.50-83.30 projected level.

USD Index Daily Elliott Wave Analysis

USD Index 4h

The USD Index moved nicely to the upside, now trading very close to 81.30, so we are prepared for a strong push to the upside in wave 3. We recently adjusted the count and labeled the end of wave 2 at the latest swing low, at 80.50. We still have alternate count on the radar screen for any surprise and another leg down to 80.40 before going up. In either case technical analysis for the USD is pointing up.

USD Index 4h Elliott Wave Analysis

About the Author

Gregor Horvat, based in Slovenia, has been in the forex markets since 2003. He is a technical analyst and individual trader who has worked for Capital Forex Group and TheLFB.com. He also is founder of forex services on www.ew-forecast.com. EW-Forecast.com provides technical analysis of the financial markets, highlighting behavioral patterns based on the Elliott Wave Principle (EWP). Website: http://www.ew-forecast.com/

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