Here's an updated 20 min chart of the dollar zooming in on the rally from the 6 August low at 80.085 (see the last update here):
Dollar 20 min:
I'm inclined to count the rally from the low as waves i, ii and iii up. On the bullish case, this would be the very initial stages of minor wave 3.
I'm not sure that wave iii is complete, but it looks like it could be there or thereabouts. Having said that, if we're in wave [5] of iii, it could extend higher, as 5th waves seem to be prone to do sometimes in currencies.
If the count is correct, then we should be about starting wave iv. We'll know its wrong if we take out the wave i high at 81.534, so that's the level to watch for the moment on this count. Preferably, if its wave iv, I'd like to see it bottom around the 38.2% retracement level, about 81.968. Anything too much lower might start to raise suspicions that something else is happening.
If we do drop below 81.534, its possible that the high at 82.786 is actually wave i (or wave (i)) and that we would be in a wave ii (or (ii)) downward retracement. In that case, we'd need to see the low at 80.085 hold, otherwise, the count would be invalidated as far as it puts us at the start of minor 3 up. If its a wave ii (or (ii)) retracement, the 61.8% retracement level at about 81.115 may be an area to look at for signs of a reversal back up.
On the bearish side, its possible to count 5 waves down from the 7 June high to the 6 August low, as you can see from the alternative count I've shown on this 60 min chart:
I would count that as wave A, with the rally from there being wave B, assuming the decline from 7 June is wave (2) down, so an overall bullish count. If we're now in wave B on this alternative count, with 5 waves up, it looks like its forming a zig zag, so after a 3 wave pullback, we'd expect another 5 waves up before we get the wave C decline.
Five waves down from 7 June, however, could, of course, also be something much more bearish, which is why the low of 80.085 is extremely important to the bullish case.
