Monday, January 09, 2012

Dollar weekly chart, shows multiple possibilities!

Bullish View
Dollar Index has multiple possibilities. One is a bullish, with a major bottom in place, as wave {I} and {II} seems to be complete. What is expected now is a dynamic advance in wave {III}. A rise in dollar is bearish for other asset classes and currencies (for us a very weak rupee ahead). But before we position ourselves for a stronger dollar lets examine alternate possibilities too.

Bearish View

An alternate bearish view on dollar can be contemplated as shown in adjacent chart. we can see a clear impulsive downmove complete and followed by a triangle formation, either complete or just abut to be completed according to the second count on chart, in which we are still forming wave E. But if the triangle was completed earlier, then we had a 5 wave move down, and a corrective upmove which is perilously close to the 61.8% retracement level of wave I down. If we get resisted at 82.591 levels then we may fall in wave III which should be especially dynamic. 
Now I have purposefully avoided putting a target on both the counts as this being a weekly chart we will get enough time to act once either of our count proves right and gives us confirmation.
But given the precarious economic conditions in US and EU, I feel our bullish count should be our preferred count, and the bearish possibility should be used to prepare a backup plan.


  1. Excellent analysis as usual. I am biased towards the bearish view. But both charts are fascinating.

  2. @Fire Bob Prechter is warning of a possible deflationary depression, owing to evaporation of huge and extremely leveraged debt burden on USA. Also we already have clear signs of it appearing in EU (Please watch these videos a BBC documentary if not already done, very informative Video I: Video II: so if these countries don't try and PRINT their way out of trouble the bullish scenario is likely, but somehow I also feel the bearish chart looks more soothing to the eye. :p


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