Review of the Weekly Dollar Index

In a recent weekend video, I said I would not become bullish on the Dollar Index until it has broken it's parallel Elliott trend channel to the upside. When reviewing the chart, below, that is only the first thing to notice as that has now occurred.

DX Futures - Weekly Nearest - Upward Break of Down Channel Line

Some other things the reader might like to note are these: Wave 2 is a short, Sharp wave, and Wave 4 is a Flat, and much longer in time, for excellent alternation. There is a clear, large gap in wave iii of 3, and another in wave iii of 5 (second red circle lower). Wave 3 can clearly be seen to have the strongest downward MACD reading. This pairs with portions of Wave 3 being clearly outside the lower boundary of the modified Elliott Parallel Trend Channel. And Wave 5 diverges from it (brown dotted line).

Note: the modification of the trend channel occurs when Wave 4 is identified. Then, the first line is drawn from Wave 2 to Wave 4, and a second line drawn parallel to 1. If that doesn't contain Wave 5, then a parallel is drawn from Wave 3.

So, with the caveat that a back-test of the channel can occur at any time, one should look for weekly prices in the Dollar Index to make at least three-waves up. This may impact other currencies, such as the Eur/USD, and commodities such as Gold and/or Oil. The first target for the dollar would be the prior Wave 4, around the 95.00 level.

This is truly a 'model' example of an impulse, and one might want to refer to it often. This is how they are supposed to occur. To have identified the waves using The Eight Fold Path Method, then since there are about 60 weeks in the chart, one would have used a two-day chart to get between the requisite 120 - 160 candles, which was the procedure I used, (60 weeks x 5 days = 300 days. And, then, 300 / 2 = 150 candles), including reference to the Elliott Wave Oscillator.

Have a very good weekend,
TraderJoe