Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19
The Narrative About Gold is Changing Again - 2nd Dec 19
Stock Market Liquidity & Volume Diminish – What Next? - 2nd Dec 19
A Complete Guide To Finding The Best CFD Broker - 2nd Dec 19
See You On The Dark Side Of The Moon - 2nd Dec 19
Will Lib Dems Win Sheffield Hallam From Labour? General Election 2019 - 2nd Dec 19
Stock Market Where Are We?  - 1st Dec 19
Will Labour's Insane Manifesto Spending Plans Bankrupt Britain? - 1st Dec 19
Labour vs Tory Manifesto Debt Fuelled Voter Bribes Impact on UK General Election - 30th Nov 19
Growing Inequality Unrest Threatens Mining Industry - 30th Nov 19
Conspiracy Theories Are Killing This Nation - 30th Nov 19
How to Clip a Budgies / Parakeets Wings, Cut / Trim Bird's Flight Feathers - 30th Nov 19
Hidden Failure of SIFI Banks - 29th Nov 19
Use the “Ferrari Pattern” to Predictably Make 431% with IPOs - 29th Nov 19
Tax-Loss Selling Drives Down Gold and Silver Junior Stock Prices - 29th Nov 19
We Are on the Brink of the Second Great Depression - 29th Nov 19
How to Spot REAL Amazon Black Friday Bargains and Avoid FAKE Sales - 29th Nov 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

Why 2 of U.S. Dollar's Recent Bottoms Have 1 Thing In Common

Currencies / US Dollar Apr 24, 2015 - 04:37 PM GMT

By: EWI

Currencies

In 2009 and 2014, a simple chart pattern enabled us to turn bullish the dollar, just in time for HUGE rallies. Learn to use this pattern now.

Imagine you're on an airplane, mid-air, when the intercom from the cockpit accidentally turns on. You and the entire cabin crew overhear the pilot say this to his copilot:

"I know we're heading northeast at 430 mph. But... I have no idea when or where I'm supposed to land."

That's when you cough up your bag of peanuts!


Dramatic? Sure. Imaginary? Yes. But it also highlights the real limits of mainstream financial analysis, which has no trouble identifying the current trend in a financial market -- but has little idea as to when or where that trend will end.

This is where the Wave Principle really can help you. Elliott wave analysis recognizes about a dozen distinct price patterns in financial markets. Each pattern conforms to clear, objective rules and guidelines that help you -- the investor or trader -- determine,

  1. Exact price levels where each wave should end
  2. Fibonacci price levels to help you further fine-tune price targets
  3. Support and resistance price levels -- to manage your risk
  4. And, ultimately, where the entire pattern will end -- and the next opportunity will begin

One Elliott wave pattern above all else signals the trend will soon end: the aptly named, Ending Diagonal. It only forms in the final position of a wave sequence -- i.e., wave 5 of a 5-wave impulse, or wave C of a correction, just as the trend is about to turn.

Most importantly, when this pattern ends, it's followed by a swift and powerful reversal that retraces the entire length of the diagonal. Here's an idealized depiction, in bull and bear markets:

To fully appreciate the wonder of ending diagonals you have to see them in a real-world market -- like the U.S. dollar, where this pattern precipitated not one, but two of the most dramatic turning points in the buck's recent history.

First, 2009, the year the music of the world's main monetary unit was supposed to die:

  1. The U.S. dollar circles the drain of a 15-month low
  2. Global central banks accumulate the lowest proportion of new U.S. dollar reserves on record (Nov. 6, 2009 Time Magazine)
  3. And, the UN calls for a "new global currency to replace the dollar, proposing the biggest overhaul of the world's monetary system since World War II." (Sept. 8, 2009 Telegraph.co.uk)

Lo and behold, all the mainstream "pilots" could see was the dollar's descent continuing into total oblivion:

"Dollar Slump Persisting As Top Analysts See No Bottom... As long as the Fed maintains interest rates at historical lows, the EUR-USD should return on a bullish trend." (Nov. 23, 2009 Reuters)

Of course, you know that the Fed has kept interest rates at the same low levels, near zero, since 2009, for 6 long years -- yet EURUSD did the opposite of what the mainstream pundits expected.

On the other hand, thanks to the ending diagonal Elliott wave pattern, you knew of the coming bullish reversal in the dollar/ bearish reversal in the EURUSD ahead of time. Elliott Wave International's October 21, 2009 Short Term Update wrote:

"The [U.S. Dollar Index] still has not 'spiked beneath 74.92, the lower trendline of the fifth-wave ending diagonal that we've been discussing. Absent this price behavior, a rally above 77.48 would be another signal that a significant low is in place. Until then, we patiently wait for the current wave structure to complete."

Reinforcing the bullish outlook was Elliott Wave International's October 2009 Elliott Wave Theorist (notice the ending diagonal on the dollar's price chart):

"The dollar sentiment remains bleak as night... and the wave count once again appears terminal. The coming advance in the dollar should be exceptionally powerful."

Result: As the ending diagonal pattern suggested, soon after the U.S. dollar index took off in a powerful rally to a one-year high against the euro.

Now, flash ahead to May 2014: Once again, U.S. dollar "doom talk" is back. Against the euro, the dollar stands at a 2.5 year low, near $1.40.

This time, Elliott Wave International's June 2014 European Financial Forecast saw a bearish ending diagonal on the EURUSD price chart, suggesting another greenback comeback ahead:

"The wave labels on the chart denote the pertinent legs of the rally...Wave C of (4) traced out an ending diagonal to complete the advance. Last month, prices broke below the diagonals lower boundary, confirming the end of the large degree rally. The decline should be the first of many down waves that carry the euro lower over the remainder of 2014."

Result: From that May 2014, the U.S. dollar soared (and the euro slid) in the fastest rise in 40 years, ascending to a 12-year high against its European foil by March 2015.

This is why ending diagonals are one of the most high-confidence Elliott wave patterns. But it's just one of many. Imagine how much knowing other patterns could help you with your markets.


Trader Education Week

Free "Trader Education Week"

Register now, 100% free, and get instant access to 3 insight-packed introductory trading lessons.

Then each day through April 28 we will email you more free trading lessons that you can apply to your trading immediately.

Register now, 100% free -- and access 3 intro lessons instantly >>

This article was syndicated by Elliott Wave International and was originally published under the headline Why 2 of U.S. Dollar's Recent Bottoms Have 1 Thing In Common. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world's largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules