As the USD is pushing to the upside today and some traders could have gone long a tad too early on X/USD pairs and are panicking, we have decided to publish this analysis in an attempt to explain how structures work and why traders need to know how they work not to panic.
Let's suppose for a moment that the movement that took the dollar basket from the 89 to the 94.5 area is impulsive, i.e. the longer term uptrend started with that movement. The downside movement right after that would then be for sure the beginning of a correction (the "a" leg, in the purple structure), and then the following "b" leg to the upside would still have to be part of the same correction, as every correction has to have a minimum of 3 parts (always). So basically, we are now expecting a "c" leg to the downside, which HAS to occur. Now the problem is that we thought that the "c" leg to the downside had already begun, because we saw that the price had started to go down quite a bit, but today it has gone back up again, almost all the way to the previous "b" point already, and it seems to be going up pretty fast. Quite obviously, all traders who did not have a perfect short position and who manage to put their shorts in break even are in a panic mode, at the moment, as they are in the wrong side of the trade. (This applies, as stated before, to all X/USD pairs, which is why we want to show what the USD is doing as it today it is obviously the green buck alone driving all pairs).
Now, what seems to be happening, and possibly will happen, is that in the dollar index the dollar price is going to slightly break the previous top. Now, does this mean that the "abc" correction is invalidated? Not at all. Does this mean that there will be no coming "c" leg anymore? Neither !
The "c" leg has to come, and it WILL come. What this means is just that what we thought was the "b" point, wasn't the "b"point. In other words, the "b" wave turned out to be a more complex "b" wave, with a higher "b" point, but the "c" wave to the downside, sooner or later is still coming.
If you feel that our analyses and views may be a useful complement to your trading strategies and in order to be notified in real time with our updates on the lower timeframes, please remember to click on the Follow button.
Remember that you can double check the bigger structures that are at play are on the weekly and daily time frames also by scrolling around the charts in the lower 4hr and 60min timeframes (right and left, up and down).
Trade with care and only with a backtested strategy that has proven to work in relation to your invested capital, risk appetite and potential small losses you might incur in before profiting from a good trade.
Thank you for viewing.
Let's suppose for a moment that the movement that took the dollar basket from the 89 to the 94.5 area is impulsive, i.e. the longer term uptrend started with that movement. The downside movement right after that would then be for sure the beginning of a correction (the "a" leg, in the purple structure), and then the following "b" leg to the upside would still have to be part of the same correction, as every correction has to have a minimum of 3 parts (always). So basically, we are now expecting a "c" leg to the downside, which HAS to occur. Now the problem is that we thought that the "c" leg to the downside had already begun, because we saw that the price had started to go down quite a bit, but today it has gone back up again, almost all the way to the previous "b" point already, and it seems to be going up pretty fast. Quite obviously, all traders who did not have a perfect short position and who manage to put their shorts in break even are in a panic mode, at the moment, as they are in the wrong side of the trade. (This applies, as stated before, to all X/USD pairs, which is why we want to show what the USD is doing as it today it is obviously the green buck alone driving all pairs).
Now, what seems to be happening, and possibly will happen, is that in the dollar index the dollar price is going to slightly break the previous top. Now, does this mean that the "abc" correction is invalidated? Not at all. Does this mean that there will be no coming "c" leg anymore? Neither !
The "c" leg has to come, and it WILL come. What this means is just that what we thought was the "b" point, wasn't the "b"point. In other words, the "b" wave turned out to be a more complex "b" wave, with a higher "b" point, but the "c" wave to the downside, sooner or later is still coming.
If you feel that our analyses and views may be a useful complement to your trading strategies and in order to be notified in real time with our updates on the lower timeframes, please remember to click on the Follow button.
Remember that you can double check the bigger structures that are at play are on the weekly and daily time frames also by scrolling around the charts in the lower 4hr and 60min timeframes (right and left, up and down).
Trade with care and only with a backtested strategy that has proven to work in relation to your invested capital, risk appetite and potential small losses you might incur in before profiting from a good trade.
Thank you for viewing.