By Avi Gilburt, ElliottWaveTrader.net
I am going to do a larger degree overview of the DXY, since I have not done one in while, and I have been getting a number of questions about it of late. So, if you are following along, please take a look at the attached monthly chart, as I go through the progression of where I think we are in the larger degree time frames.
Back in 2011, we correctly saw the impending multi-year rally developing in the DXY, whereas most others were looking for the dollar to crash. In fact, our target was 103.53, the 1.618 extension from the 73 region, which we exceeded by 29 cents before the market turned back down. And, to put this market call into context, many of you may remember the certainty within the market that the dollar was going to crash due to all the QE thrown at it. Yet, the exact opposite occurred, which clearly surprised most of the market . . . well . . . at least those who were not reading our analysis.
Initially, I had expected the turn down in the DXY from 103.53 to be a 4th wave, which would hold support at the 91.70 region, the 1.00 extension and common target for a 4th wave. However, when we exceeded that support to the downside, we then overlapped into what I was initially counting as wave 1 off the 2008 lows (now labeled as an a-wave), which then invalidated the standard impulsive structure I was tracking since that time. This caused me to re-assess the entire structure since 2008, which has me viewing the larger structure now as a corrective rally into 103.82.