It’s obvious that we see the US dollar in a bullish phase. Technically, it would be called a bear market rally if we believe that more downside is still to come.
Otherwise, we just assume that the US dollar bear market is over and the great USD bull market will resume. The horizontal line connects at least 7 points, which can give the US dollar rally reason to pause or even run out of power! I will be looking for a wave 2 top in Minor degree with the trend line being well within the previous 4th wave of one lesser degree. Any wave 2 rally is not limited by any means to stop dead at the trend line above as %60-%70 percent rallies can and do take place. In short, the general guideline for previous 4th wave reversal might not mean anything.
Fighting against the bigger trend can take more time than normal, so we have to have patience as I believe that the US dollar still has a huge bear market to show us. This USD rally is keeping a lid on gold and silver prices and it could still force a temporary drop in the price of gold and gold stocks.
The Euro is also crashing, and our CAD seems to want to take a rest from getting beat up. US Dollar COT reports do not show that both types of traders are in radical positions which gives the US dollar a bit of flexibility how high it can go.
The US dollar had made the small move I was expecting, but I don’t think it’s over just yet. The US dollar could plunge back down to the 88.800 price level, then make another move to the upside which could be the end of a wave two rally in Minor degree. This could still take all of March to finish off, but I’m sure the Fed announcement this coming week, will create some wild moves in both directions.
The speculators are very close to being even with their positions, so they will have to shift to a major net short position when the US dollar hits another major bottom.
The commercials made all the right moves last week and they are still in a net short position by about a 3:1 ratio. Once this corrective counter rally has played out, then this should also have a positive effect on gold.
Any Fed policy will not push the US dollar into a real bull market, no matter how many analysts may think that it can happen. This entire US dollar decline can take until the end of solar cycle #24, which is still a few years away. Every major science site that tracks the sun will be recording and reporting this event, so there will be no excuses that we didn’t see solar cycle #25 coming!
This year the US dollar is having problems getting past this 88-89 price level, which the bottom trend line highlights. The herd of conventional analysts is just starting to suspect that the US dollar is in a bear market. This is far too late, to be any use to the futures traders that know how to bet up or down. (Take long or short positions)
Conventional indicators in the highly leveraged commodities world doesn’t work, because if they did the majority would always be the winners. The fact is the majority can never win because it is mathematically impossible to do so.
The US dollar bull market that started in late 2008 displayed a choppy bull market that happens in false or bear market rallies. In a bear market rally, the market eventually must retrace its “entire” bullish move, which would not be completed until the US dollar travels below the 70 price level. This would take a few more years or until solar cycle #25 starts up.
I want to see the US dollar slice through that bottom trend line, as we still don’t have a great looking spike. The US dollar has already entered the price territory of the 2009 and 2010 peaks, which effectively kills any idea that a perfect impulse was in progress.
Still there is no real bottom that can offer price support to the US dollar at this time. Every time analysts are looking for support, you have to ask, “support for what”? Support for a huge US dollar bull market to suddenly materialize? From my perspective, some key contrarian indicators have to be in place before the US dollar suddenly leaps into a bull market. None of those conditions exist just yet so until they do, the US dollar is doomed to decline even more.
It was a real challenge to call the 2008 bottom as we were far too early, but finally the US dollar started to soar, and our CAD and Euro started to implode. When we constantly read about the bearish US dollar, chances are good that a strong reversal is being set-up.
Short term we could still see some gyrations, but long term the US dollar is still doomed to go lower.
The US dollar has been in a bearish mood lately, but it can still create another corrective pattern as well. 89 is just one rounded Fibonacci numbers I use, and the US dollar has turned around that number before. Commercial traders are still net short, so chances of jumping into a huge USD bullish phase are low on my list. Wild counter rallies do happen and they can’t always be spotted before they happen.
Any decline in the US dollar for “any” fundamental reasoning, will help keep the bullish pressure on gold. At least until the entire US dollar bearish move has completed. There are no contrarian indicators showing up, that say we are at the bottom of a US dollar bear market. We might get another “C” wave attack, that can force another leg up with the US dollar, but then I would bet that the commercial traders positions would also have shifted dramatically.
In the last few days, the declining pattern has been a diagonal pattern, which could run out of steam in the short term.
This could be very slow going as well, so I will not report every little wave made with the US dollar cash index. Futures are leveraged asset classes which produce very wild moves. Futures are played in both directions creating these wild swings, which Bitcoin traders can’t really do. The lack of short players in Bitcoin reduces the wild moves, otherwise the Bitcoin waves would display insane moves in both directions.
Way back in 1980 the US dollar bottomed and then soared in an insane vertical move which I think ended with a wave 3 in Cycle degree. We can say that Regan was responsible for that rocket move. 1980 was also the peak of solar cycle #21, so the US dollar repelled up from the sc#21 peak.
Then from the 1996 sc#22 bottom, the US dollar did the opposite thing and soared again until the peak of sc#23 in 2000. From this sc#23 peak the US dollar repelled in a big move south that didn’t end until sc#23 bottomed in late 2008! For about 8 years the US dollar rallied with the run up of sc#24, but then the USD also repelled from the SC#24 top in 2014.Now the US dollar is heading south as sc#24 is also heading south.
By 2020 or so sc#24 will end and then we start up in sc#25. SC#25 could be a huge bullish setup for the US dollar. The big thing is that the US dollar, solar cycle action, always seems to alternate. This alternation action doesn’t happen in the main stock indices, as the solar cycle bottoms can produce real wild bull markets. These bull markets can also be maintained right through the entire solar cycle decline which it has done on this sc#24 decline. A few of my contrarian indicators also have to be lined up, when it’s the right time.
We do have a few years time before extreme indicators show themselves. The majority must hate the US dollar first, but right now you are lucky if the crowd even suspects that a US dollar bear market is in progress. Conventional meanings of bear markets and bull market corrections, mean very little to me as commodities, mainly run on leveraged fear. Fear has nothing to do with logical! A 61% crash can just be a wave 2 correction, and many 4th waves can see a 40% drop. Both moves would still be a bull market correction from an Elliott Wave perspective.
I also see a potential huge wedge being setup so that sure could send the US dollar soaring as well. This will not happen next week or even next year, but looking a few years ahead should be our constant focus.
There still is a threat of the US dollar to head a bit higher as sideways movements can’t be trusted for very long. We could add on a wild little spike to the upside, which can always produce fantastic reversals. From my perspective, this is a 3-3-5 move which means its an inverted flat and a fake.
The US dollar has been in a bearish phase for over a year now. Calling it a bearish phase may not be right as that would suggest that the US dollar is still in a bull market. If the entire US dollar bull market (2008-2016) was a big bear market rally then the US dollar has a very good chance of being “completely” retraced. This would mean that the 70 price target would eventually get hit again. Even lower would not hurt any longer term wave counts I presently have.
The problem is the US dollar will never go down in a straight line, and we wouldn’t want it to. It will give all the wave analyst a real hard time, and rightly so as they think creating a bunch of simple “ABC” patterns is wave counting. The EWP has turned into a mindless trade setup tool which any student can produce after a year or so. Any kid with a ruler can show you a trend line which is one of the most abuse technical indicators used today.
I love working on the big waves and have worked on the US wave count for close to 20 years. Sure, I got many things wrong, but I’m a tenacious kind a guy and don’t give up that easily.
When the US dollar was still pointing up, I was forecasting for it to hit the 89 price level, where it sits today. We could still be in a Minuette degree 4th wave that still has to play out, but then we could be faced with a wave 2 counter rally. This wave 2 counter rally could be a fast and furious surprise move that the majority of US dollar analysts will not see.
In late 2016 the planet was bullish on the US dollar as all the experts had very bullish US dollar wave counts. Even now the US dollar commercial traders are increasing their net long USD positions, which still would need to increase by a large margin. The commercials in the Euro and our Canadian dollar are all in net short positions, so this could present some problems at one point in time.
The majority of analysts tells us what the speculators as doing, which is called managed money. The speculators are always the trend chasers, which always gets them into a trap. A little more sideways or up, US dollar price action would round off our present rally much better, as the US dollar should still fall below 87. At the 87 price level, the US dollar is coming up to the bullish trend line, that could give the US dollar some stiff resistance in the short term.
Trump Expresses Support For Strong U.S. Dollar 2018.01.25 (en)
Trump Supports the US Dollar are the recent reasons why the US dollar has rallied. Does that mean the US dollar crash is going to stop and miraculously turn into a bull market? No, not on this planet! The only way that a true bull market can form is if the US dollar has completed an “ABC” crash already. The US dollar was due to rally already and the only question is how high?
The US dollar doesn’t even have to go very high as it can go sideways for weeks, before another leg down might happen. There is a very good chance that another 4th wave bullish phase is in progress in Minuette degree. We need this impending wave 3-4 rally to play out and then we may be getting close to a potential wave 1 in Minor degree.
Presidents can try and jawbone the US dollar up, but debt holders like China and Russia can throw a monkey wrench into that plan anytime they want. I think we still may have 3-5 weeks left, before we can expect a Minor degree wave 2 counter rally. The US dollar is just a bit below the Fibonacci number of 89 where it can build a base, with many very short 5th waves.
In Greenspand days analysts watched the size of his suitcase to try and figure out how much paper work was in it about a rate change. Next month we will get a new Fed and even then, can a single man turn 100’s of trillion dollars of declining value to increase in value?
For the last two months the US dollar is on a slide that sure looks like a pretty impulse wave structure at this time. Once 5 waves are completed, then a 3 wave counter rally specific to the degree I’m working on, is supposed to happen. The idea that we could be in another triangle in a 4th wave position doesn’t fit the way I like it too, so we could still see a counter rally much bigger that what I have right now.
The top trend line is only there to show a future counter rally resistance rally, as any counter rally can come back to the previous 4th wave of one lesser degree. This would give us a 96.200 retracement price level. At this point I’m working from a wave 2 base which I may change to a 4th wave base, at some point in the future.
I would have to use the daily chart and take another look, so short term this is a bit fuzzy. When parts of the intraday charts are fuzzy, then I switch to daily and weekly charts to get another perspective. This small rally can still surprise us if it’s not finished yet. The US dollar will not switch back to its big bullish phase until the majority of the expert talking heads, are on board the bear wagon, and have developed a consensus opinion. That situation is still a long way away at this time.
At the extremes the markets will always do the opposite of what fundamentals suggest. Just like analysts paint us a rosy picture at the top, the opposite happens at major bottoms, when they paint us a very bleak, or pessimistic picture. The more pessimistic, the bigger the counter rally is my basic guideline.
The US dollar keeps on crashing, and it should continue for the foreseeable future. Surprise rallies will be part of the landscape, but when we are in a big bear market then any rally will only be a temporary thing. Gold has responded to the USD crash like it has done many times before and has broken well below the 91 price level, that I have talked about in my updates.
I have another couple of downside targets that I would like to see get retraced. One of them is the 89 price level with these futures charts, another price level that should get hit will be at about the 80 range. A falling US dollar is basically inflation rearing its ugly head, but that is what politicians have wanted for many years, with their 2% inflation rate.
Buying gold after it has already soared does not protect us from inflationary pressures, but this is what gold analysts keep telling us we should do.
They may just be starting to recognize the fact that the US dollar could be in a bear market, which makes them pretty slow in recognizing any trend reversals. When you are watching the evening news and two or 3 different talking heads mention how the US dollar is crashing, then chances are good the US dollar will reverse and soar.
The US dollar has made some violent moves lately. One minute it can be a calm decline and the next thing you know it wakes up and swings violently in both directions. Any asset class that is related to commodities has some serious leverage to it. I consider all currencies as a commodity as well. The majority could be just waking up to the fact that the US dollar is in a bear market, which is usually the time when downside consensus forecasts start coming out. This news is a little harder to find right now, but on major turnings, there will be no doubt in how the public will be feeling.
I dropped my degree level down by one degree, which makes the wave action seem more sensitive, which can also get us out of a trap. The degree level is so small that I’m scraping the very bottom of the list.
Any US dollar bear market is not over until more bears jump on this bandwagon going south. On the 10th a violent move up could also be part of a diagonal which contains mostly zigzags. We are presently on a very small move up, but could see more upside before it’s finished. It’s the US dollar decline which is the main driver of the gold price, but other times the inverse correlation is impossible to see for short periods of time.
We will have to wait until next week before we can find out how much more downside in the USD we’re still going to get. We can get a strong counter rally with the US dollar at any time, but it doesn’t mean the bear market is over.
Short term we could see some wild bullish moves, but in the bigger scope of things I’m still very bearish.
After a great US dollar crash or swan dive, it has now recovered and started to soar with the stock markets again. This rally is not the resumption of the big US dollar bull market, but just a small bearish rally. We will get these small counters rallies all the time, but the trick is not to get fooled by any single rally, even if it travels further than anticipated.
Long term this US dollar can retrace its entire bullish phase, which started in early 2008. The US dollar rally started well before the stock market bottomed in early 2008. A few places where my parallel lines get sliced in two, is not that big of a deal from my perspective. Trend lines are abused by most technical analysts, as it’s not rocket science to see a trend line. Even a kid with a ruler can see the trend lines without any instructions. A little more upside can happen, but the reversal should push the US dollar to another record low.
Gold has also reacted down with this US dollar rally, so if gold is still set to soar, then the US dollar is still set to crash and burn. As usual the majority can never take advantage of these cycles, as they don’t have the patience to ride out any corrections. Emotional traders charge through most of the markets, chasing anything that moves up or down, but the seasoned contrarians get a big laugh out of these market antics. Monkey See! Monkey Do! Seems to be the herd mentality at any given time.
Media attention about the crashing US dollar has started to gather attention, when the US dollar spiked to the downside. How much short term downside, there is still to come, is unknown, but the bigger bearish trend is still clear. The US dollar is in a much bigger bear market than what anyone expects to happen at this time. The US dollar will not turn on some mythical price bottom and carry on to new record highs, as it takes much more than just price to stop any trend.
Sure, short term bullish moves will happen, but not until the entire world hates the US dollar and loves gold, can the US dollar be ready for another new bull market. Yes, we may have some problems figuring out this potential wave 1-2 in Minor degree, as we still have a small window for the US dollar to turn north and produce a “C” wave bullish run.
Also the commercial traders are back to being net short, but they are starting to add to their long positions. Short term, that may produce a US dollar rally, and slow gold down a bit as well.
The US dollar can backfire and turn into a “C” wave bullish phase. If and when that happens, then we know the top trend line will get sliced in two. The trend line that touches more peaks or dips is the main trend line, and bigger degree levels will wander far outside this trend line.
Maybe raising of the minimum wage this year is causing the US dollar to crash, and not some secret evil currency manipulators.
The US dollar bearish phase has seemed to kick in again, and is now approaching a classic downside breakout situation at the 92.500 price level. As bearish as that may be the 90.600 price level could offer the US dollar bears another big surprise. Ultimately, we want to see the US dollar crash below the wave 1 in Minor degree as that is just one way the wave count can get confirmed.
I have not had to change my potential “D” wave top in Primary degree at this time, so there is lots of room for the US dollar to keep moving down, for the next several years or so. Of course, those pesky counters rallies always get in the way, which many think can be the start of the next big bullish phase. Dollar bulls start to throw in the towel, only surrendering to the bears, after most counter rallies start to fail.
In the future the entire mainstream media will turn bearish towards the US dollar, and gold analysts will be urging you to buy into the gold bull market, to protect yourself against the ravages of inflation. The sad fact is, that this is far too late in the inflation cycle, when gold will do little to protect you.
In Just a few short weeks the US dollar will be starting its second year in a bear market. The mass media still hasn’t caught on, as they think that the US dollar is still in a bull market. As much as some of these counter rallies look like the return of the “Bull”, they are giving the US dollar bulls false hope. Gold’s steady bullish moves so far, helps to confirm this.
The bullish move that started in September of 2017 works as a diagonal move, and since it took longer to play out, I have to look at it from a Minor degree perspective. The US dollar may still seem a bit sluggish heading down, but I’m sure the US dollar will still have some, “Bad hair days”.
Very bearish stock action this morning helps to make my case, that the bearish action of the US dollar will continue. When the headlines tell us to get out of the US dollar, and gold is finishing a vertical move, we can expect a reversal of the US dollar, stock, and gold relationship. The entire US dollar bullish phase that started back in 2008, could have been a big bear market rally, and the only way for that to get confirmed, is when the US dollar breaks below the 2008 lows.
Short term we may still see some US dollar bullish action, but longer term the US dollar is in a big bearish phase.
The US dollar has now traveled a bit higher than I would like to see. After some more daily chart reviewing, we could have finished a “B” wave bottom in a wave 1-2 pattern. Even without the US dollar heading much higher we could already have reached a wave 2 top in Minor degree. That gap down below will get filled as the US dollar is still in a bear market.
The majority has not clued into the fact that the US dollar has been in a bear market already. Bull markets end when the majority of experts are in consensus, saying that the bull market will “never” end. The exact same thing happened in reverse with the 2008 USD bottom when a bull market was born. Until the experts have the consensus opinion that the USD is very bearish, then it will be time for the bear market to end. This all may sound silly to the majority, but it’s the mainstay thinking that contrarians use.
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In the US dollar bullish run that started in December is a pretty steep angle. We are also getting a double top, and as an added bonus, we have the possibility of a H&S pattern. If I was far more bullish, then chances are good that the H&S pattern will never hold.
We also have a nice fat gap, still open below present prices, which will get closed in time. There is a 90% chance of any gap getting closed, but some of them could take years to close.
All those Bitcoin owners who sell and convert into the US dollar will find that the US dollar is crashing. How long would it take to panic out of the US dollar, especially if the only asset class that will be going up, ends up being gold and silver?
In the big scope of things the impending “E” wave decline in the US dollar, could take it to new record lows. When the headlines dominate with US dollar bad news, then we may be ready for another wild USD bullish phase.
The US dollar has charged a bit higher than expected. Another zigzag rally could be in the process of completing, which I will use as a wave 1-2 in Minute degree. There is also a huge open gap, below present prices, so this acts like a magnet and eventually it will draw prices down to it.
With the stock market still acting very bullish, the US dollar could soar in a dramatic fashion. We do have a questionable Minor degree 4th wave top which gives us a few more options, than just a single counter rally 1-2 wave.
What we have on the daily chart is a vertical move, that could be the exhaustion wave, of a counter rally. The question is, if another wave 3-4-5 will still happen or if the US dollar starts to head south again? Our Canadian dollar also took a big swan dive in the last few days, which just confirms the inverse relationship to the US dollar. When the US dollar decides to turn down, then our CAD should start to turn up.
Let’s say that I have at least 3 possible tops in the larger degree, and that a zigzag decline is still realistic. This 4th wave rally can turn, and produce yet another long extension, before we get to the “A” wave position. It would be great if the US dollar ends on wave 1 in Intermediate degree. The big question is, if the US dollar is in a big bear market or in just another bull market correction? Not until the US dollar shows us, that a zigzag of a bigger degree has formed, can I turn bullish on the USD.
The extreme bullish sentiment that the public signaled to us, on that late 2016 peak has not matched any counter bearish feeling of the same intensity. In 2008 the majority hated the US dollar, and in 2016 they just loved it again, so we still have a missing time period when the majority hates the US dollar again.
Any bearish mood we’ve had recently, is not enough for a new bull market to bounce from. Markets always behaved the opposite of what fundamentals may be suggest at that time. In the commodity world, swings are far more dramatic, due to the massive leverage built into them.
So far the US Dollar’s decline is pretty obvious, but what is never that obvious is to figure out exactly what type of a pattern we are going to get, and where we are within this pattern.
At this time I will stick with the “D” wave top in Primary degree, but also a potential wave 3 top in Primary degree. They both have the same bullish mood, at record tops, but the “D” wave top will take us to new record lows, while a 4th wave decline will not. Below the 89 price level the US dollar would be classified as a Diagonal 4th wave decline, but it still keeps the 4th wave scenario low on my list of probabilities.
92 is the first price level that has to get beat, in which we are not too far away. The decline in the last few days of last week, started out as a diagonal decline, which would slow down a bit due to the choppy nature of diagonal waves. A good surprise would be that another C5 wave from a zigzag has just started, which would also push any short term support much lower.
So far we have the makings of a classic Minor degree wave 3 extension with 2 back to back sets of 1-2 waves.
I looked over the USD COT report on Friday and the commercial traders still carry net short positions, but the spreads are shrinking and eventually the commercials will become net long. Until that happens this US dollar bear market is alive and well.
Those that think that stocks are on some mythical permanent high, must also believe that the US dollar will still soar to new record highs. Well, the US Dollar has already been in a decline and stocks are on shaky ground, so this scenario is just a daydream.
We would need a wave pattern that clearly shows us that a correction has taken place and after this “ABC” correction, the US dollar must soar to new record highs. The US dollar does not have enough bears present to justify a major move to new record highs at this time.
On the 18th the US dollar created a little zigzag bounce, but by the time they reported the bullish move, it was already pointing down. I don’t think there are short term surprises, where the US dollar can still charge up to the very top trend line.
Short term the US dollar still has to head to that 92 price level, as by then we will be forming another H&S type setup. We can get a good bounce from there, but H&S patterns are also good down side breakout setups.
Last week the COT report showed that the commercials added to their US dollar long positions by a fairly substantial amount. The commercial hedgers are still in a net short position, and I don’t think we will get a super rally until these same commercials become skewed towards a net long position.
Short term rallies sure, but a complete switch back to a bull market is not in the cards just yet. The public would have to be freaking out about how much the US dollar has fallen, and investors would be running into gold. Of course that would be another US dollar bear trap setup, and a strong reversal would be due.
Many may think that the USD is just in a big bull market correction, but in order for a major correction bottom to appear, we need the majority to spew out bearish downside scenario news reports. If this situation happens at the 89 or 59 price level is irrelevant, but the “type” of bearish pattern we finally end up with is. We can get one big zigzag, (5-3-5) crashing to a new world record low, but that can still be many months or even years away.
The US dollar can break out of the two declining trend lines with ease, because most trend lines are a subjective take on things. Trend lines are very abused, and with diagonal waves the trend lines are hardly effective, but they do serve a purpose to isolate certain sections.
The US dollar is taking another hit as it seems to be charging back down again. This is what I expect to see happen until the media becomes very bearish towards the US dollar. On intraday scales this may be harder to recognize, but it is the intensity of the news that is more important, than what each individual fundamental news story may contain.
The late June rally looks like an impulse, but it quickly fell apart at the top. That early July top looks like a great ending diagonal, and now it is just a matter of time, but new US dollar lows should still be in our future.
Until all the commercials have switched to net long positions and the speculators do the opposite, no real bottom will happen. Yes, smaller rallies will help to confuse the situation for those that think that the US dollar is still in a bull market.
The US dollar bull market ended in late 2016, and this bearish phase is now 6 months old. Stocks have been declining better than expected, which is reverse to any stock mania conditions we had. Even on the short term US dollar rallies, stocks can rally right along with the US dollar, but we have to be aware that any rally can just be a fake.
Only time will tell, but short term, we need the US dollar to go much lower.
Towards the end of last week, the US dollar started another rally from a recent low. In early May the US dollar displayed what can count out as an expanded pattern, making it fit very well into the B3 wave of a zigzag. We can also get that correction into a potential 4th wave counter rally followed by another clean 5 wave decline. With the A5 waves and C5 waves alternating like this, I favor the zigzag pattern.
The US dollar has gone from a massive bullish high, and now is well into the 5th month of a bearish phase. How big this bearish phase will eventually go is unknown, but there should be no more fresh bull market highs with the US dollar. In order for the US dollar to just be in a big bull market correction, we need for many more US dollar bears to show up. Even that will not work if the entire US dollar bull market that started in 2008, was just a big bear market rally. (Fake Bull Market)
It’s not just any bottom we are after as we need an extreme US dollar bearish mood before another big rally will come. Any US dollar rally could correspond very well with a counter rally in stocks, as they sure can love each other, during any stock mania moves.
In a big bearish move, any foolish price support forecast will never hold, or at least not for very long, as every bearish rally in the US dollar will be temporary at best.
Besides the US dollar topping at a potential “D” wave in Primary degree, it would be pretty wild if that “D” wave is actually a 4th wave rally, in Intermediate degree. Only time will help clear that up, but in the longer term, the US dollar bear market is far from over.
When the mass media celebrates how horrible the US dollar has performed, and they are pumping the value of gold, then we have to be ready for a very strong reversal.
So far the US dollar has been cooperating and has been making continuous lower lows. This is what helps to drive gold higher as gold is on a real tear, heading north. Diagonals are linked together with “B” waves so this could be the last run to a potential wave 4 in Minute degree. The decline after the late May top sure can work as a diagonal as well, so we have to be aware that any further decline can be very choppy, but it may look much like an impulse decline.
From here on we could get unexpected violent reversals which are next to impossible to catch beforehand, but I keep trying just the same. Sometimes we get lucky as the patterns seemed to bunch up just before a violent reversal. For now I remain bearish towards the US dollar as the bear market has a long way to go. I no longer get the Market Vane Report, then this makes checking the commercial traders positions more important.
At this time the commercial traders are still net short the US dollar by a margin well over 2:1. It is when the commercials become net long is when we have to take notice, as a bigger bear rally may then have a good chance of forming.
The speculators or trend chasers are doing the exact opposite, as they are still net long by about the same ratio.
A bear market would not be the right description if the US dollar erases 8 years of upward progress. There is still a very high probability that the US dollar bull market was a big bear market rally itself, when we completed a “D” wave top in Primary degree. I think I was too early with my Minute degree wave count, so I have started to extend our present pattern. The recent May crash could also be ending at another zigzag, so we may get a surprise fast move up.
The US dollar is not going to jump back into a bull market for several more years, but we should see a rather large counter rally when we reach a potential “A” wave in Intermediate degree. This will correspond well with a potential strong top in gold. The commercials are still net short, with the speculators net long. When all this reverses, then the US dollar would be in a position to produce a very strong rally. This should still be a long way off.
Short term we may see a small rally, but longer term, my bearish outlook has not changed. The stock mania regarding the US dollar has gone into hiding, but we could see it return with any good stock market rally. Many will be just short term moves.
The US dollar just keeps on trucking which it is making it higher than I would like to see. I moved the “A” wave up, but that still gives a short “C” wave. I can handle short, as many times zigzags do not come out even at all.
The “C”wave sure looks like an ending diagonal which I did not count out as such, and is the main reason why I jump a wave unlabeled. Either way this US dollar bullish phase is a bull market head fake, as eventually the US dollar should resume its bigger bearish phase. Support in February 2017 could turn into resistance, which would be about the 101.200 price level.
Longer term I’m very bearish on the US dollar and I think there is still a long way for the US dollar to travel before it hits a major bottom. 5 waves down could take the rest of the year to play out, but longer term the US dollar’s bear market could take another 2-3 years, so be prepared for a long wild ride.
When 5 waves down in Minor degree are fully realized, then we should expect a huge counter rally in the US dollar, and a possible peak in the gold price.
The wave 2 top in Minor degree is still holding which is a good thing.
The US dollar bearish phase has been going for nearly 3 months, and it’s far from over. The recent rally fits better as an impulse, so it must find a home where it is connected to. “C” waves can be part of expanded patterns which can look like impulse waves. When I see a set of 5 waves stuck out there on its own, we can think about a bear market rally. Of course it would be normal to look at this rally and think a much bigger impulse is coming. Only time will give us more information and next month may be the month to do it.
Later, when we find a potential “B” wave rally, the waves could be very impulse like as well. We don’t want to be fooled into thinking that the return of a major US dollar bull market is just around the corner, as that would also crush the price of gold. We are in a potential Primary degree “E” wave decline with an Intermediate degree zigzag, so we have a long way to go. 2008 to late 2016 was what sure looked and counted as fake bull market, which technically has to be ompleteley retraced.
Impressive crash that the US dollar has been in. Of course I love to see the US dollar finally going the way I think it should. So far it has retraced well over half of the February bullish phase. Another new record low, to retrace all of the February bullish phases would be nice, but the diagonal wave will keep us guessing in the short term. If the wave 2 top in Minor degree is in, then we have a long way to go before any potential wave 3 bottom in Minor degree may arrive.
To fill any Minor degree wave three declines, we need 5 waves in Minute degree, and chances are good they will be diagonals. We could get one single long zigzag heading down, where we will never see or even count 5 waves in Minute degree. This would show up as a single bump somewhere in the middle of wave three, and it only makes sense when we look at it from a diagonal pattern perspective.
Once this USD bear market becomes more obvious, then we can expect the occasional bigger drops, as more fearful traders panic to get out of the US dollar. Longer term I’m very bearish on the US dollar as the entire US dollar bull market since 2008, could have been a “D” wave in Primary degree.
Near this “D” wave top, the Market Vane Report, registered 91% bulls. This leaves no room for a new herd of Dollar bulls to come in.
In the short term any rally can suddenly explode and travel much further back up than expected, but in a bear market, those moves will always get retraced.
The US dollar sure has been on bullish phase that has carried on taking longer than anticipated, but the time factor is now long enough to fit into a wave 1-2 rally in minor degree. It would be nice for the US dollar to pop up and make another high, but then I would also like to see it nosedive after that. This rally has taken about 5 weeks so far, so that time is also my rough guideline how long wave 4 may last. Using good old Fibonacci we may get an 8 week 4th wave correction. Violent moves can shorten any time move so we have to be prepared for that as well.
The worst scenario would be for the US dollar to hit a new record high, as that would force a “D” wave, review.
The US dollar has come of its bullish cycle, but if it has the power to go higher remains to be seen. I believe a wave 2 top in Minor degree could have completed, so we have to keep looking for the bearish wave counts to materialize. In a bearish situation every rally will run out of steam. Even if we have no clue how high it might go we have to watch for inverted zigzags or even flats. Eventually, it is the us dollar bear market that will really help to drive the gold price, so keeping a wave count going on the with the US dollar is critical.
If this wave 2 top is real or just imaginary, I always have the idealized 5 wave script ready in memory, and I want to know at the earliest moment when the US dollar refuses to act out of character. By constantly review to make sure it all fits together very well is the key. If a Minor degree blows its position, then this is a signal that our wave counts do have a serious flaw.
The funny part is that, “ALL” wave counts have flaws in them as soon as the electronic ink dries. As long as they keep counting diagonals with impulse wave positions, they will always miss the 3 wave patterns. I don’t think investors have really noticed the USD bear market yet, but when they do, it may be on the 5th wave of this sequence.