Thursday, 1 July 2010

17:37 BST - Dollar Update

Well, the dollar gave it up today, bringing in the more bearish alternative count from the earlier charts, which put us in either a larger single zig zag then the one originally labelled or a double zig zag. Here's the re-labelled chart from which I've deleted the old count and put the double zig zag as the main count:

Dollar 60 min elliott wave chart:

If this count is correct, we could see a bottom in the dollar failry soon. However, caution is required since there are other alternatives:

1) if we are actually in a larger single zig zag, where (w) would be (a) and (x) would be (b), we are now in wave (c). That requires 5 waves down from where wave (b) would be and so far, there are only 3 waves down. So, we'd need another up and down sequence before this correction is over. It therefore implies some further downside, but would not be inconsistent with this count which puts us in a wave [iv] of minor 3 correction; or

2) we might only be in wave a of (y) for the double zig zag, and again, we'd need 5 waves for wave a and we only have 3 so far. This alternative would imply a good deal more downside and it might even mean that the count I have that has us having topped in minor 5 and intermediate wave (1) is in play, so that we would now be in intermediate wave (2) down rather than minute [iv] of minor 3.

So, reasons to be cautious to the long side for the time being, though there are reasons to look for a bottom soon, given that we are still at an area of support. Of course, what we want to see is 5 waves up and a 3 wave retracement that doesn't break the last low. It would be no guarantee that the decline is over since it could still be a corrective rally, but it would be a start.