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Sunday, August 1, 2010
USD Index and EUR/USD - Is wave 2 finished?
The chart above is the USD Index and as can be seen the zig-zag correction from 88.71 is very close to its bottom, if it hasn't already bottomed. It has corrected 50% of the wave 1 rally and it can't go below 80.97 as that would make wave iii of C the shortest of the impulsive waves in wave C and that is not allowed under the EWP.
If we take a look at the EUR/USD chart (see below). We can see that wave 2 has corrected 38.2% of wave 1 and wave five of C is almost done if not done already, a break below 129.66 would confirm that the top is in place.
As is the case with the USD Index wave 5 of C can't rally above 132.24 as that would make wave 3 of C the shortest of the impulsive waves in wave C. If wave v of C has more upside potential I would not expect a move much above 131.33.
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