We are still hearing an abundance of calls for the death to the US Dollar, which have amazingly continued during this entire rally from 2011 – which we called for back then. But, the dollar has given no indications that it has even been afflicted with an ailment, so the dire prognosis is quite surprising to me.
Rather, we have been in a long 4th wave consolidation, and set up to head higher quite imminently, as we have been suggesting for the last few weeks. Anyone following fundamentals or who has bought into the perceived power of the Fed over the dollar has completely missed this rally since 2011, but Elliott Wave analysis has provided the true clues to this market.
At this point in time, one cannot even consider any bearish scenario as long as the DXY is over the 93.80 level. In fact, one cannot even be concerned about a bearish potential as long as the DXY remains over 95.10, as the setup is in place for the DXY to finally break the 100 level with a minimal target of 101.50, as long as we do not break back below 95.10.
As far as the micro count is concerned, I am questioning whether we have already begun wave (3) of iii, or if we are just completing wave (1) of iii. If we are already in wave (3) of iii, then we will be looking for the DXY to strike at least the 97.80, which would then bring support up from 95.10 to the 96 level. Any break down below 96 from the 97.80 level would be an early warning to the immediate bullish case.
But, in a much more bullish posture, if the top of wave (1) of iii was struck on Friday, then we should see a corrective pullback in the DXY over the next week or so, which will then set up the run to the 101.50 minimal target, but with the potential to head up as high as the 103.50-105 region.
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