Best of the Week
Most Popular
1. Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - Nadeem_Walayat
2.Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - James Burgess
3.Gold Price Trend Analysis - - Nadeem_Walayatt
4.The Beginning of the End of the Dollar - Richard_Mills
5.Stock Market Trend Forecast Update - - Nadeem_Walayat
6.Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - Troy_Bombardia
7.Precious Metals Sector: It’s 2013 All Over Again - P_Radomski_CFA
8.Central Banks Have Gone Rogue, Putting Us All at Risk - Ellen_Brown
9.Gold Stocks Forced Capitulation - Zeal_LLC
10.The Post Bubble Market Contraction Thesis Receives Validation - Plunger
Last 7 days
Stock Market Detailed Map Of Expected Price Movement Before The Breakout - 18th Oct 18
Determining the Outlook for Gold Mining Stock - 18th Oct 18
Investor Alert: Is the Trump Agenda in Peril? - 18th Oct 18
Stock Market is Making a Sharp Rally After a Sharp Drop. What’s Next? - 18th Oct 18
Global Warming (Assuming You Believe In It) Does Not Affect Gold - 18th Oct 18
Best Waterproof Compact Camera Olympus Tough TG-5 Review - Unboxing - 18th Oct 18
Silver's Time Is Coming - 17th Oct 18
Stock Market Volatility Breeds Contempt - 17th Oct 18
Gold 7-Year Bear Market Phase Is Over - 17th Oct 18
Gold - A Golden Escape - 17th Oct 18
Tec Stocks Sector Set For A Rebound? - 16th Oct 18
Real Estate Transactions are Becoming Seamless with Blockchain-Powered Data Sets - 16th Oct 18
Important Elements of a Viral Landing Page - 16th Oct 18
Stephen Leeb Predicts 3-Digit Silver and 5 Digit Gold?! - 16th Oct 18
BREXIT, Italy’s Deficit, The EU Summit And Fomcs Minutes In Focus - 16th Oct 18
Is this the Start of a Bear Market for Stocks? - 16th Oct 18
Chinese Economic Prospects Amid US Trade Wars - 16th Oct 18
2019’s Hottest Commodity Is About To Explode - 15th Oct 18
Keep A Proper Perspective About Stock Market Recent Move - 15th Oct 18
Is the Stocks Bull Dead? - 15th Oct 18
Stock Market Bottoms are a Process - 15th Oct 18
Fed is Doing More Than Just Raising Rates - 14th Oct 18
Stock Markets Last Cheap Sector - Gold - 14th Oct 18
Next Points for Crude Oil Bears - 13th Oct 18
Stock Market Crash: Time to Buy Stocks? - 12th Oct 18
Sheffield Best Secondary School Clusters for 2018-19 Place Applications - 12th Oct 18
Trump’s Tariffs Echo US Trade Policy That Led to the Great Depression - 12th Oct 18
US Dollar Engulfing Bearish Pattern Warns Of Dollar Weakness - 12th Oct 18
Stock Market Storm Crash, Dow Plunges to Trend Forecast! - 12th Oct 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