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US Dollar Index Five Waves Up Points to Higher USD

Currencies / US Dollar Aug 22, 2013 - 05:50 PM GMT

By: Gregor_Horvat

Currencies

EURUSD found some support an hour back or so, after disappointing US Unemployment claims. So I decided to check the intra-day structure on USD Index to see where the buck is positioned and headed next. Well, on the line chart I can see some very clear impulse to the upside, but its presented on a line chart. Its a clear five wave move with a textbook example of an extended wave three. If you are still learning Elliott Wave, then I suggest you to save and print this chart.


Current structure suggests that low is in place, because five-wave move is important evidence for a direction of a current trend. If that’s the case then we know that any pull-back to the downside should be only corrective retracement before USD breaks even higher.

USD Index 30min – Elliott Wave Analysis

Impulse extension-Elliott Wave Pattern

Most impulses contain what Elliott called an extension. An extension is an elongated impulse with exaggerated subdivisions. The vast majority of impulses contain an extension in one and only one of their three actionary subwaves.
The fact that extension typically occurs in only one actionary subwave provides a useful guide to the expected lengths of upcoming waves. For instance, if the first and third waves are about equal length, the fifth wave will likely be a protracted surge. Conversely, if wave three extends, like on our USD Index chart and on basic chart below, then the fifth should be simply constructed and resemble wave one. In the market, the most commonly extended wave is wave three.

Basic chart of extended third wave

Written by www.ew-forecast.com | Try our 7 Days Free Trial Here

Ew-forecast.com is providing advanced technical analysis for the financial markets (Forex, Gold, Oil & S&P) with method called Elliott Wave Principle. We help traders who are interested in Elliott Wave theory to understand it correctly. We are doing our best to explain our view and bias as simple as possible with educational goal, because knowledge itself is power.

Gregor is based in Slovenia and has been in Forex market since 2003. His approach to the markets is mainly technical. He uses a lot of different methods when analyzing the markets; from candlestick patterns, MA, technical indicators etc. His specialty however is Elliott Wave Theory which could be very helpful to traders.
He was working for Capital Forex Group and TheLFB.com. His featured articles have been published in: Thestreet.com, Action forex, Forex TV, Istockanalyst, ForexFactory, Fxtraders.eu. He mostly focuses on currencies, gold, oil, and some major US indices.

© 2013 Copyright Gregor Horvat - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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