The USD Index has been locked in a sideways pattern since early 2008, this pattern is most likely a triangle, but it could also be a very complex series of waves one's and two's. At this point it seems that all waves unfolds in three's, which will indicate that we are looking at a triangle and therefore I prefer this Count slightly above the much more bullish Count.
Looking at the triangle Count we are currently in the middle of red wave d, which should reach close to support at 75.00, before the final e wave takes over.
If we zoom in on red wave d. We have seen a three wave decline from 84.75 to 79.08, which I have labeled red wave w. The price action since the 79.08 low also has unfolded in three waves, which I have labeled red wave x and I will be looking for a new three wave decline closer to the 75.00 target in wave d. However, a break above minor resistance at 80.27 and more importantly a break above 80.35 will indicate that red wave b of the x wave became very complex and that a impulsive c wave higher towards 81.75 should be expected before the x is finally over and renewed downside pressure takes over for a decline closer to 75.00.
Hi EWS,
ReplyDeleteI'm not sure if I can follow completely.
The decline from 2002 to 2008 was a 5 wave impulse, and now this triangle is correcting this impulse? Or is this triangle part of an A wave?
My question is, once the triangle is complete (e wave), the trend will continue down, right? (triangles are continuation patterns). I think the measured move would call for a 20ish USD decline from 75ish to 55ish. Is this realistic? It would send gold to the moon for sure.
Hi Haigo,
DeleteYes the decline from 2002- 2008 is best counted as a five wave decline and the Price action since March 2008 does look like a triangle and if this is the case, then yes we should see a break towards the downside once the triangle terminates.
However, what looked like a triangle one day could have taken an entirely new shape the next day so it's to early to conclude for sure, that it is a triangle, but all the ups and downs does come in three waves since March 2008, which does indicate that a triangle is the best count for now.
Regarding Gold, then yes it will move above the old top at 1,920 if the USD-Index break down from the triangle but I think we are years from that outcome.
Kind regards
EWS