Sunday, November 18, 2012

Dollar Index - Elliott Wave Analysis

The weekly chart of DI seems to forming a triangle in wave {B}. We may be in the last leg of wave {B}. Wave E of {B} seems to be forming a double three correction. I feel there is more upside left before we call an end to this wave E of {B}. The detailed count is shown below, on daily fractal.
This chart shows the labeling in detail of this last advance in wave E of {B}. We can see RSI is treading strong, and has crossed the 65 level mark, this suggests the trend is strong, and any pullback would most likely be bought into. Also there is no long term bearish divergence forming yet on both Weekly and Daily fractals, that again should add credibility to further strength in DI. Though my use of a single indicator here may seem insufficient, but two other popular indicators Stochastics and MACD (not shown here) too tell the same story.
Now I may be wrong, and DI may turn down, or I may be more wrong and DI just breaks out into the much anticipated "deflationary depressionary" rally and invalidates the bearish triangle pattern. But my analysis tells me to expect more price action before calling an end to this triangle pattern.
As a safety measure I would say, if DI trades below 79.65 then this wave E can be deemed complete. But above that level there is always a chance of further upside.
Ideally I would love to see a flat pattern in wave [y] of E of {B}, as that would mean a progressive loss of strength in the rally, and a corresponding built up of strength of the decline that may follow post completion of this triangle pattern. Even a failure of wave (c) of [y] of E of {B} is welcome, but we need a clear 5 wave move that fails to take out the wave (a) top, to confirm this count.

Note: Neither Neowave nor Classical EW is endorsed here in particular, I use both of them together, much to the dismay of ardent followers of either of the theories. I was a classical EW follower first, but was compelled to study Neowave by fantastic analysis by a fellow trader. But now I am stuck in between, and actually liking it. You get best of both the worlds, better risk management, what else do we traders need. But for analysts its a different story altogether, and I can't and won't fight them, so my dear analyst friends please don't bother. But if my trader friends want to add something they are more than welcome here.
Though this website is about trading, I am not offering any trading advice, this blog is to share my ideas with like minded people.


  1. i first read prechter and was completely taken in by it. after hearing about it, I've tried reading mastering elliott wave by neely at least thrice... every time i couldn't go beyond chapter 3 ......too complicated for me... i still want to know if there is a more lucid and simple way way too understand his concept..

    1. Dear vimz,
      You should skip the third chapter and read rest of the book. There are many valuable nuggets which you can use not knowing the third chapter.
      The third chapter though looks overwhelming but is actually based purely on logic. So if you read it to memorize it like we do with any other rules then its difficult, but if you read it to understand the logic then perhaps it may start clicking for you. Just read the book excluding the third chapter a couple of times you will enjoy it.
      Thanks for your question.

    2. Vims,
      If you want to really to be EW experts,then go for GLENN NEELY ways...because Glenn Neely describe briefly in MEW about doing progressive labels...and describes also what rules required doing the labels like Time consumption, price structure, complexity, degree, momentum characteristics….etc.
      Prechter ways is not always be confuse and uncertain at every time. Always Changing labels at every moves of markets.