DanV
Short

DXY - POSSIBLY AT REVERSAL ZONE

INDEX:DXY   U.S. Dollar Index
Longer term price projection is dependent on longer term historical price data. On this chart we have history going back to 1968 which is not ideal for what I wish to analyse but adequate to form a view based on a particular theme which I adopted since Sept 2012. Namely that USD has lost over 95% of its value since early 1900 say from 1920.

If correct, then we could assume that such a major extended move must be part of a very long 5 wave decline or significantly a larger ABC zigzag and we could be towards the end stage of that. Based on that assumption I am postulating that we could be in potential ending diagonal ( falling wedge ) wave C or wave 5. This could have started from 1985 high.

In such a longer term analysis it is impossible, to precisely plot the likelihood of the exact price path, so it should be treated as just an outline with allowance for reasonable flexibility. Recent parabolic move to upside has been very impressive. This has resulted in many forecasting a continued strength of USD for many more years to come. Likewise many analysis or chartist have attempted to project , how long and how far it might rise, based on variety of previous swings and potential geometrical relationships and fractal similarities.

I cannot necessarily say they are wrong and many would suggest that my previous charts of DXY             have been way off the mark, which could be justifiable. Under the circumstance often folks have said that even broken clock is right twice a day but then having nothing credible to replace it.

Nevertheless, the DXY             index is so important to many assets and trying to get a feel for where it could be headed would prove advantageous from possibly anticipating how this might impact other USD related assets and to know when we might need to either adjust our views or know when we are likely to be wrong in out analyses.

Hence I am sharing my analysis with most of the details on the chart. In particular if the DXY             price data has mapped out a triangle of some sort since 2009 high. If this is correct it could provide valuable clues as to its future price direction for following reasons:

1. From Elliottwave perspective price breakout from triangles are terminal moves, which means that upon completion of 5 wave move after the breakout the cycle would end.
2. Therefore they are only found in waves B, X and 4.
3. Further The triangle from 2009 high could be a limiting triangle as explained below.

Limiting Triangle- these are normally called as the potential of price move is limited upon a breakout, often by the height of the triangle. There is very little reference to this form of triangle. But it could be recognised if the price breakout point takes place close to or after 78.6% of width of the triangle then the upside is approx the height of the triangle. Where are breakout prior to this and ideally by 61.8% of the width could have extended move which would be more than 100% of the height of the triangle.


Summary:
1. DXY             is in a larger downtrend and possibly forming a larger falling wedge ( ending diagonal ).
2. Has retraced 61.8% of the move from 2001 high to 2008 low
3. At the upper end of the minor rising trend channel from 2008 low
4. In GREEN - Wave A = Wave C measured move.
5. Wave C appear to have completed 5 wave cycle, with the wave 5 being extended and parabolic (please see below weekly and daily charts below for close up view) suggesting only a retest to the recent high would compete the cycle.
6. RSI is very extended and in overbought zone.
7. Stochastic is in potential bearish crossover at overbought zone.
8. There are various interesting potential time symmetries - please see chart for details.

Please see below for 2nd Part
http://www.danv-charting.com
https://www.youtube.com/channel/UChJVIJir7nymD9J3ZWoal-w/feed
https://www.tradingview.com/chat/#E4bnOJSWcO1zDjBG
snapshot

Hi, DanV.

Thanks for sharing. DXY seems like forming a rising wedge (possible a ending diagonal) in daily or 4hr chart. I did some wave counts by myself, but not realize there was a triangle. At the same time, GOLD is nearly bottom in EW point of view, and EURUSD also forming a falling wedge at the end of abc retracement after leading diagonal you mentioned before in your chart. I'm wondering DXY probably is topping while SP500 is also forming a megaphone pattern in monthly chart.
Reply
DanV MOD PlayDefence
Thanks for your comments.

You could be right in your analysis of DXY. This last move up from long consolidation might be the final thrust in which case we could form double top.

Alternatively, it could be leading diagonal wave 1 of 5. If this is correct then DXY will move much higher, like 105 or something. Worth watching with other correlated instruments you mentioned.

December FOMC outcome could be the final deciding factor.
Reply
You meant leading diagonal in a new bullish cycle from 2008 ? Would that violate longterm down trend projection?
Reply
DanV MOD PlayDefence
Yes after very long consolidation. It is very likely, specially if FED raises rates. The wave count would change somewhat. From 2010 low it might become a rising wedge. I would not dismiss that right now.
Reply
Aha. Leading diagonal from 2010, 5-3-5-3-5 wave count. It makes sense. There's really many possibilities in EW world. Thanks for pointing that out.
Reply
DanV MOD PlayDefence
Hehehe, not leading diagonal from 210 low, rather an ending diagonal, but leading diagonal from recent consolidation.
Reply
Thanks. But it seems no 3-3-3-3-3 count for an ending diagonal, though it could be a large rising wedge from 2010's low. Would you chart out?
Reply
DanV MOD PlayDefence
Here is what I mean, since 2008 low we could be carving out ABC and wave C commencing from 2010 low which is looks like 5-3-5-3-5 and possibly form ending diagonal (as possible count). Hope this clarifies
snapshot
Reply
Thanks for sharing. I got it. I also charted it ABC retracement above. It's a possible rising wedge and looks like an ending diagonal. But I thought ending diagonal is only 3-3-3-3-3 count and 5-3-5-3-5 is for leading diagonal. Anyway, you meant long term trend is still in down trend either way, hope I am not miss out your point.
Reply
DanV MOD PlayDefence
Longer term trend is not changed, at least not just yet but will keep it under review. Regarding Ending diagonal, both formation are possible. It is not very clear how this should be labelled. Still overall Looking for major topping once this cycle is complete.
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