US Dollar Setting Up Another Trading Rally

11/30/2017 9:26 pm EST

Focus: CURRENCIES

Avi Gilburt, Esq

Founder, ElliottWaveTrader.net

As long as we hold over the 91.70 region in the US Dollar Index, many may wind up quite shocked with the potential rally the DXY seems to be telegraphing it wants to set up over the coming weeks, writes Avi Gilburt, technical analyst and author of ElliottWaveTrader.net.

I am actually quite surprised with reading many of the public articles and blogs focusing on the US dollar of late. It seems many are again calling for the end of the world for the US dollar. But, I have been seeing something quite different than most in the US Dollar Index (DXY) chart.

I remember back in 2011, when the DXY was in the 73 region, and many were also calling for the death to the dollar at that time. But, for those following my work since I began publishing it in 2011, I was looking for a multi-year rally in the DXY, with a target for a 3rd wave in the 103.53 region. And, at the start of 2017, we struck a high of 103.82 to complete that 3rd wave before we began the pullback we have experienced since that time. But, admittedly, I was off by 29 cents in my multi-year call. (Smile!)

The DXY has been adhering to our Fibonacci Pinball analysis almost perfectly for years. And, our next larger expectation is for the DXY to rally back to the 100-101 region into 2018. The only question with which we have been grappling is if we see one more lower low before we begin that rally back to the 100-101 region or not.


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Based upon the structure we have completed over recent weeks, it strongly suggests that the current decline is only a (b) wave in the first move up off the recent lows within the larger degree corrective rally back towards the 100-101 region.

As you can see from the attached 21-minute DXY chart, we are now moving down into our target region we set for the (b) wave of the larger degree green a-wave of the green (b) wave, as shown on the daily chart.

And, as long as the market holds over the 1.382 extension off the high in the 91.70 region, my expectation is that this (b) wave pullback will set up the DXY to rally over the 96 region.

So, that means as long as we hold over the 91.70 region in the DXY, many may wind up quite shocked with the potential rally the DXY seems to be telegraphing it wants to set up over the coming weeks. 

Alternatively, if the DXY should strongly break below the 91.70 region, then it certainly opens the door to the market making one more lower low before the next larger degree rally back to the 100-101 region begins in earnest.

See charts illustrating the wave counts on the DXY.

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