Tuesday, 3 August 2010

8:31 BST - Dollar Update

The potential ending diagonal in the dollar that I mentioned last week and on the dollar page, was well and truly busted yesterday. Its now looking like wave [v] of C (assuming that's what it is) is a straight impulse wave as shown on this 60 min chart:

Dollar Index 60 min from wave (1) high at 88.708:

Looking at it close up from the wave [iv] of C high at 83.455, it looks like there may be a bit more downside to go. That 80.792 low may be wave iii of (v), or it may only be part of wave iii, though its also possible that 80.792 may mark the low. Any long entry here taken on the basis that we may have seen the low would probably need to be closed if we do drop below that level, but obvioulsy it depends on trading style.

Dollar Index 60 from wave [iv] high:

I would tend to wait for the type of action I've described previously, an impulsive move up that takes out a potentially important level. Here, if we ran up in 5 waves above the wave (iv) high at 81.977 and then pull back in three waves, that would certainly be a reasonable signal to try a long position. Or, for an earlier entry, a smaller clear 5 waves up followed by a 3 wave pullback would also be a reasonable entry.

Obviously, it should be borne in mind that the trend, for the time being, is firmly down, so any long positions taken need to have regard to that.