Friday, December 16, 2016

Elliott Wave Analysis of the USD Index - Will resistance here at 103.32 hold?

The Rate of Change -30 months

USD Index with the 30 month ROC

USD Index - Will resistance here at 103.32 hold?

I "bumped" into the Rate of Change (ROC) chart last night. The text in blue didn't really matter to me, but I noticed two things.
  1. The ROC is at levels, only seen a 30-40 years.
  2. When the ROC peaked at 42 in 1983 the decline in the ROC bottomed at -41.5 and the same relation was seen in 2001 to 2004.
So when the USD index finally peaks we should be looking at for the ROC to decline to the negative opposite number of the peak. That said, it's important to remember that just because, we are at extreme levels for the ROC it does't mean the top is in place, but that we should be aware that the rally from 2011 is an elite move. 
From an Elliott wave point of view wave 3 is currently testing the 161.8% extension target of wave 1 at 103.32. If a clear break above here is seen, then we should look for a continuation higher to the 200% extension target seen at 110.55. The minor count shows that we are in wave iii of [5] of 3, so after a correction in wave iv more upside towards 110.55 is likely in wave v of [5] of 3.
A continuation higher to 110.55 would fit the EUR/USD count nice as more downside is expected here towards 0.9580. 

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