The alternate wave count was confirmed which expects that we may have seen a trend change last week.
We continue with the possible trend change as our main wave count and provide an alternate that may explain further downwards movement.
Elliott Wave chart analysis for the USD Index for 8th March 2012. Please click on the charts below to enlarge.
Main Wave Count
The dollar is seen within wave 3 blue to the upside.
Within wave 3 blue waves i and ii pink are seen as complete. Wave iii pink is expected to be subdividing into green degree with waves (i) and (ii) green complete.
A ratio within wave (ii) green is: wave c orange is .03 longer than .618 the length of wave a orange.
Upwards movement is therefore expected within an impulsive structure for wave (iii) green. This should see price move well beyond the end of wave (i) green.
We have a full daily candle above the upper trend line of the trend channel about wave (ii) green. This increases our confidence in this wave count.
Movement above 80.12 would confirm this wave count as our alternate daily would then be invalidated. There would however be other lower probability alternatives.
A conservative target is at 85.16 where wave (iii) green would reach equality with wave (i) green. A more typical target is the 1.618 Fibonacci ratio of wave (i) green. We will use this ratio once more of the structure within wave (iii) green is complete.
Movement below 78.10 would invalidate this wave count as no second wave correction within wave (iii) green may move beyond the start of the first wave.
This hourly wave count sees the Dollar within the first impulse labeled i orange within wave (iii) green.
Wave i orange has a very good impulsive look and we expect it is complete, meaning that we should be seeing short term downwards movement within wave ii orange.
Ratios within wave i orange are: wave 3 purple has no adequate Fibonacci ratio to wave 1 purple and wave 5 purple is .03 longer than .382 the sum of waves 1 and 3 purple.
We expect to see wave ii orange move to the price territory of the fourth wave of one lesser degree, which is wave 4 purple. This aligns well with the .382 Fibonacci retracement of wave i orange. We would need to wait for more of the structure within wave ii orange to determine a more likely target.
According to this wave count the short term upwards potential is limited as the Dollar should be moving lower and sideways over the next few days to a week.
If we see further upwards movement then it is likely that one of the sub waves within wave i orange is extending higher, this would still leave the upwards potential limited as a second wave correction would then still be very close.
Alternate Wave Count
This alternate daily expects wave (ii) green is incomplete and that wave c orange is sub dividing into purple degree with wave 1 purple complete.
Wave 2 purple is seen as an impulse, and therefore this is probably only wave A within wave 2 purple and waves B and C should still follow before wave 2 purple would be complete.
Movement below 78.10 would confirm this wave count as the main count would then be invalidated.
Movement above 80.12 would invalidate this wave count as wave 2 purple may not move beyond the start of wave 1 purple.
If this wave count is invalidated, then wave (ii) green may still unfold as a flat correction with wave a orange complete at the label for wave 1 purple.
Movement below 74.72 would invalidate this wave count to the downside as wave (ii) green may not move beyond the start of wave (i) green.
