Wednesday, 1 September 2010

12:15 BST - Dollar Update: In wave (ii) down of minor 3?

Here's an update for the dollar (you can see the last update by clicking here and on the dollar page):

Dollar 45 min:

In my last update I was thinking that we had topped in wave (i) of minute [i] of minor 3 up, but there was a possibility that we were still in wave  [4] of v of (i), so I wanted to see the level of 82.717 taken out by way of confirmation.

That level was eventually broken, so my main count  here is that we are now in wave (ii) of minute [i] of minor 3.

I've left the retracement levels for that on the chart and as mentioned in the previous update, I'm looking at a retracement to somewhere around the 50%-61.8% level which is between 81.800 and 81.394.

I've labelled wave (ii) so far as an a-b-c zig zag with wave c probably in wave [3]. Within that wave [3] of c, on a smaller time frame it looks like wave [3] still needs a 4th and 5th wave to complete, and then we'll see waves [4] and [5] of c.

If this is correct, at least the 50% retracement level should be attainable. Its also possible that this a-b-c correction might only be wave w of (ii) and that we will have more downside to a deeper retracement level with wave y. Once I see 5 waves down from the b wave high, I'll be watching how price moves up for clues as to whether or not its the end of the correction. 

Its also possible that what I'm labelling as an a-b-c should itself be an almost complete w-x-y correction, so instead of seeing 5 waves down from where I have labelled wave b, we would only need 3 waves down to complete wave y. On my reckoning, it would be almost done, if not already, and would fall short of the retracement levels I'm looking at.

The only warning of this would be to see what happens after the low in what I would label as wave [3] of c currently. It should be followed by a corrective looking move up for wave [4] and must not end above the wave [1] low at 82.988. If it moves up there, that would be a strong indication that we may have seen an end to the correction. Taking out the high I've labelled as wave b at 83.303 would be a stronger sign that the correction was probably over. However, we'd also have to see a strong impulsive move up  and above the high labelled (i) at 83.522 given that we would be in wave (iii) of minute [i] for greater confidence.