In the fast-paced world of currency trading, it sometimes is good to look at longer cycles. The Elliott wave consists of long and short time cycles. It is very difficult when the waves of smaller degrees lie within the waves of larger degrees. Five impulsive waves of smaller degree can lie within a single corrective wave of a larger degree. The chart I constructed for you goes back to 1995. Can you think of trades you did that didn't work out? Maybe it was because your SHORTER harmonic study was in conflict with LONGER TERM CYCLES. Let's look at DXY for 21 years: This is a MONTHLY chart.
There was a strong uptrend from 1997-2001. During this time period most currency trades favored the USD. THE PHASE ENERGY WAS POSITIVE. Check it out for yourself - being long the USD gave you an edge. During this time an AB=CD harmonic pattern developed. I placed the Fibonacci retracements on the charts - the numbers fit. From 2002-2008 this changed. THE USD was generally weaker. THE PHASE ENERGY WAS NEGATIVE (mostly below the zero line) An AB=CD (bullish reversal) pattern was setting up, but this took six years.
The USD decline reversed in 2008, very near Fibonacci 1.272. A new harmonic pattern developed during this consolidation time period, a bullish BAT. If you look at the phase energy (top bars), they went above and below zero, indicating the formation of the bullish BAT.
Starting in May of 2011 a new impulse leg started from the "D" leg of the bullish BAT, and this leg went from $72.54 to Fibonacci 1.618, or $1.497.
The DXY has been falling (or consolidating) since then, and right now, do we have a bull move or bear move? For one, I published a chart two days ago with a confirmation of an upside breakout at $94.30 (breaking a long-term down trend line). In addition, the phase energy is well above the zero line. These are very positive signs. It is important to note that the down move held at around $94.228, which is Fibonacci 1.272 (a logical point in which to stop).The last DXY print was $94.608 (Friday 05-13-16). The shorter term work that I do strongly suggests that the USD is going higher. But the longer term work I do also suggests the USD is GOING HIGHER. One last tidbit: the stocks that I chart that EXPORT are behaving poorly. This very well could be the stronger USD, because this hurts their currency spreads for competitive pricing against other countries.
My advice: always step back and look at the bigger picture. The Elliott waves come in eight cycles: 1-Minuette, 2-Minute, 3-Minor, 4-Intermediate, 5-Primary, 6-Cycle, 7-Supercycle, and 8-Grand Super-cycle. The longer the time the stronger the effect.
I would like to close today with a quote about time. One of you told me you thought I looked like a professor (Thank you. I am a math major, taught statistics at college, and perform statistical studies in manufacturing). Actually, I own a small business with 60 employees, and the photo is from the factory floor - I am answering questions. The story about time goes like this......
“When I told one of my employees this was the fifth time he was late this week, he said, ‘well Don, after all, it's Friday’!”
I hope this longer term perspective helps you to better understand shorter term moves. May all of your trades go well. Don.
There was a strong uptrend from 1997-2001. During this time period most currency trades favored the USD. THE PHASE ENERGY WAS POSITIVE. Check it out for yourself - being long the USD gave you an edge. During this time an AB=CD harmonic pattern developed. I placed the Fibonacci retracements on the charts - the numbers fit. From 2002-2008 this changed. THE USD was generally weaker. THE PHASE ENERGY WAS NEGATIVE (mostly below the zero line) An AB=CD (bullish reversal) pattern was setting up, but this took six years.
The USD decline reversed in 2008, very near Fibonacci 1.272. A new harmonic pattern developed during this consolidation time period, a bullish BAT. If you look at the phase energy (top bars), they went above and below zero, indicating the formation of the bullish BAT.
Starting in May of 2011 a new impulse leg started from the "D" leg of the bullish BAT, and this leg went from $72.54 to Fibonacci 1.618, or $1.497.
The DXY has been falling (or consolidating) since then, and right now, do we have a bull move or bear move? For one, I published a chart two days ago with a confirmation of an upside breakout at $94.30 (breaking a long-term down trend line). In addition, the phase energy is well above the zero line. These are very positive signs. It is important to note that the down move held at around $94.228, which is Fibonacci 1.272 (a logical point in which to stop).The last DXY print was $94.608 (Friday 05-13-16). The shorter term work that I do strongly suggests that the USD is going higher. But the longer term work I do also suggests the USD is GOING HIGHER. One last tidbit: the stocks that I chart that EXPORT are behaving poorly. This very well could be the stronger USD, because this hurts their currency spreads for competitive pricing against other countries.
My advice: always step back and look at the bigger picture. The Elliott waves come in eight cycles: 1-Minuette, 2-Minute, 3-Minor, 4-Intermediate, 5-Primary, 6-Cycle, 7-Supercycle, and 8-Grand Super-cycle. The longer the time the stronger the effect.
I would like to close today with a quote about time. One of you told me you thought I looked like a professor (Thank you. I am a math major, taught statistics at college, and perform statistical studies in manufacturing). Actually, I own a small business with 60 employees, and the photo is from the factory floor - I am answering questions. The story about time goes like this......
“When I told one of my employees this was the fifth time he was late this week, he said, ‘well Don, after all, it's Friday’!”
I hope this longer term perspective helps you to better understand shorter term moves. May all of your trades go well. Don.