Friday, 20 August 2010

11:51 BST - Dollar Update: 25 min chart

The dollar held the 81.192 low in what looks like a wave [2] pullback (it was deep - about 88.6%), which is what I was expecting to see after the apparent 5 waves up from 81.192 for wave [1]. You can see the last post here.

Here's the updated chart:

Dollar 25 min:

You can see how wave [2] came right back down to the lower line of the pale green pitchfork and close to the upper line of the red one (both from yesterday's chart). Coinciding as they did with the 88.6% retracement level, it was a good place to get long the dollar - I've said before, that retracement level is one of my favourites since it gives a low risk entry point for positions.

I've drawn in two more upward forks which reflect the acceleration we've seen in the move up today. If this is wave [3] up, the steeper one will ideally be the fork that has the greatest influence on price.

We're above the median lines of both of those new forks, which is bullish action in pitchfork land. What I'd like to see now is any retracement hold at or above the upper line of the pale green fork from yesterday and/or the median line of the new dark blue fork (the less steep one) and head towards the upper line of the new dark green fork which should also take it above the upper line of the dark blue fork.

In elliott wave terms, if my labelling is correct, we are in wave (3) of [3], so the next pullback in wave (4) must stay above the wave (1) of [3] high at 82.610. If it doesn't, the labelling is wrong. I'd then look to the wave (2) of [3] low at 82.416 - as long as that holds, we could be in a (1)-(2)-1-2 up within wave [3].  If it doesn't hold, then I think a re-assessment will be needed.