Best of the Week
Most Popular
1. Trumponomics Stock Market 2018 - The Manchurian President (1/2) - Nadeem_Walayat
2.Yield Curve Inversion a Remarkably Accurate Warning Indicator For Economic & Market Peril - Dan_Amerman
3.China is Now Officially at War With the US and Japan - Graham_Summers
4.Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18 - Plunger
5.Stock Market Longer-Term Charts Show Incredible Potential - Chris_Vermeulen
6.U.S. Stock Market Cycles Update - Jim_Curry
7.Another Stock Market Drop Next Week? - Brad_Gudgeon
8.The Death of the US Real Estate Dream - Harry_Dent
9.Gold Market Signal vs. Noise - Jordan_Roy_Byrne
10.The Fonzie–Ponzi Theory of Government Debt: An Update - F_F_Wiley
Last 7 days
Turkey Debt Crisis is Not Contained - 20th Aug 18
Surviving a Trade War in the Age of Trump and Brexit - 20th Aug 18
Stocks Get Closer to January's Record High, What's Next? - 20th Aug 18
London Eye Best Times to Visit for Shortest Queues - Tourist Tips - 20th Aug 18
What the Copper and Gold Crash Means for Commodities and Stocks - 20th Aug 18
Stock Market Challenging Recent High - 19th Aug 18
Venezuela's Great Bolivar Scam, Nothing but a Face Lift - 19th Aug 18
Heavy Truck Sales Sending a Bullish Sign for Stock Market - 19th Aug 18
Why Oil Prices Fell -- Stockpiles or Price Pattern? - 18th Aug 18
Why The Uranium Price Must Go Up - 18th Aug 18
Land Rover Discovery Sport 90% Motorway Driving MPG Fuel Economy in ECO Mode - 18th Aug 18
GDX Gold Mining Stocks Q2’18 Fundamentals - 18th Aug 18
SPX Losing Gains - 17th Aug 18
What Gold Is Not - 17th Aug 18
Dollargeddon - Gold Price to Soar Above $6,000 - 16th Aug 18
Stock Market Higher Again, Correction Over? - 16th Aug 18
Up Your Forex Trading Game - 16th Aug 18
Large Caps Underperformance vs. Small Caps is Bullish for Stocks - 16th Aug 18
“The Big Grab” - Failing Pension and Retirement System - 16th Aug 18
How US Indo-Pacific Vision Forgot Asian Development - 16th Aug 18
Impulse Moves in the Currencies - 15th Aug 19
Best Merlin UK Theme Park Summer Holiday 2018 - Thorpe, Alton Towers, LegoLand or Chessington? - 15th Aug 18
The Essence of Writing an Essay that Must be Understood - 15th Aug 19
Is Solar Energy Rising From The Ashes Again? - 15th Aug 18
A Bullish Bond Argument That Hides in Plain Sight - 15th Aug 18
Jim Rogers on Gold, Silver, Bitcoin and Blockchain’s “Spectacular Future” - 15th Aug 19
A Depressed Economy And A Silver Boom - 15th Aug 19
Moving Averages Help You Define Market Trend – Here’s How - 14th Aug 18
It's Time for A New Economic Strategy in Turkey - 14th Aug 18
Gold Price to Plunge Below $1000 - Key Factors for Gold & Silver Investors - 14th Aug 18
Dow Stock Market Trend Forecast 2018 - Video - 13th Aug 18
Stock Market Downtrend to Continue? - 13th Aug 18
More Signs That the Stock Market Will Rally Until 2019 - 13th Aug 18
New Stock Market Correction Underway - 13th Aug 18
Talk Cold Turkey Economic Crisis - 13th Aug 18

Market Oracle FREE Newsletter

Trading Any Market

U.S. Dollar: Why It Pays to Use the Elliott Wave Model

Currencies / US Dollar Apr 07, 2018 - 05:06 PM GMT

By: EWI

Currencies

See the signs that could’ve helped you nail two junctures in the greenback's trend

The legendary football coach Vince Lombardi believed that a winning team is built on mastering the game's basics -- so much so that at the start of the season he would "remind" veteran players, "Gentlemen, this is a football."

Lombardi would even take them out to the field, discuss the boundaries and remind the players that the goal is to get the football into the end zone.


This relentless review of the basics paid off. His team, the Green Bay Packers, won five championships, including the first Super Bowl.

It also pays to master the basics of Elliott wave analysis.

The basic Elliott wave pattern for financial markets is five waves in the direction of the main trend with corrections, i.e., moves against the trend, unfolding in three waves.

So, in an uptrend, prices would rise in five waves and fall in three waves. In a downtrend, prices would fall in fives and rise in three waves.

With that in mind, let's review how our U.S. Short Term Update editor made this bearish call on the U.S. Dollar Index last November.

The advance from the 91.011 low on September 8 to the 95.150 high on October 27 is still best labeled a three-wave structure. The implication of a three-wave advance is that the next-larger-degree of trend is down. So the dollar should eventually decline below 91.011 to complete the pattern from the January 3 high.

The Elliott wave "basics" delivered: That's exactly what happened.

Look at this chart from the February 16, 2018 Short Term Update, which said:

The [U.S. Dollar Index] declined to 88.253 today, breaking below the wave iii (circle) low. Prices have satisfied the minimum expectations for wave v (circle) and we are now able to label wave v (circle) complete. In turn, a complete fifth wave also means the five-wave decline that started at the 103.820 high on January 3, 2017 is complete. Prices should now be starting the largest advance of the past 13 months.

Indeed, the U.S. Dollar Index began to rise from that very day.

As the March 28 Short Term Update noted:

The [U.S. Dollar Index] jumped sharply to 90.147 today in the largest one-day intraday rally in 5 months.

Interestingly, around the last week of March, a group of hedge funds held its largest net-short position in U.S. dollar futures and options since August 2011.

Will the hedge funds turn out to be right, is the dollar rally expected to reverse?

Maybe. But remember, crowd psychology at big market turns often reaches an extreme like that, which -- from a contrarian perspective -- only helps you to validate your "basic" Elliott wave analysis.

If you are prepared to take the next step in educating yourself about the basics of the Wave Principle -- access the FREE Online Tutorial from Elliott Wave International.

The Elliott Wave Basic Tutorial is a 10-lesson comprehensive online course with the same content you'd receive in a formal training class -- but you can learn at your own pace and review the material as many times as you like!

Get 10 FREE Lessons on The Elliott Wave Principle that Will Change the Way You Invest Forever.

This article was syndicated by Elliott Wave International and was originally published under the headline U.S. Dollar: Why It Pays to Use the Elliott Wave Model. 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.


© 2005-2018 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