The USD Index continued to move lower as the last Elliott wave analysis expected. The target for a low at primary degree was 94.83. The low was reached 3.01 below the target.

ELLIOTT WAVE ANALYSIS

MONTHLY CHART

US Dollar Elliott Wave Chart Monthly 2017
Click chart to enlarge.

A Super Cycle degree impulse looks to be incomplete for Super Cycle wave (I).

Cycle waves I, II and now III look complete within Super Cycle wave (I) impulse. Cycle wave III is just 0.50 longer than 1.618 the length of cycle wave I.

Ratios within cycle wave III are: there is no Fibonacci ratio between primary waves 3 and 1, and primary wave 5 is just 0.5 shorter than equality in length with primary wave 1. Primary wave 3 is the longest extension and has the strongest slope.

Cycle wave II was a deep 0.89 single or double zigzag lasting 26 months. Given the guideline of alternation, cycle wave IV may be expected to be a more shallow sideways correction which would likely be longer lasting. So far it has lasted just ten months.

WEEKLY CHART

US Dollar Elliott Wave Chart Weekly 2017
Click chart to enlarge.

A breach of the maroon Elliott channel provided an indication that cycle wave III was over and cycle wave IV had arrived.

If cycle wave IV is an expanded flat or a running triangle or a combination, then primary wave B or X within it may make a new high above the start of primary wave A or W at 103.82.

Primary wave B or X would most likely be a zigzag, but it may be any corrective structure. It may be a sharp upwards movement or a choppy overlapping time consuming consolidation.

For the short term, while price remains within the narrow yellow channel, assume the trend remains up.

DAILY CHART

US Dollar Elliott Wave Chart Daily 2017
Click chart to enlarge.

This labelling assumes that primary wave B may be a zigzag. But this labelling may need to change as primary wave B may be any one of more than 23 possible corrective structures.

The blue channel is an Elliott channel about the first five up. This may be intermediate wave (A). Assume the trend remains up while price remains within this channel.

Minute wave iv may not move into minute wave i price territory below 93.79.

TECHNICAL ANALYSIS

MONTHLY CHART

US Dollar Elliott Wave Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

ADX is still declining, so it does not yet indicate a trend.

Both the one and two year moving averages are now negatively sloped and price is below both. The one year average may be now crossing below the two year average. This would be a full bore bearish look.

With RSI not oversold and Stochastics exhibiting no divergence with price at lows, there is room for price to fall further.

It is very important to note that at the monthly chart level Gold and the USD Index do not have a reliable negative correlation. At this high time frame, they can spend months not correlated.

Each market should be and will be analysed separately. We cannot expect that analysis of one market showing movement expected in one direction means our analysis of the other market should show it to move in the opposite direction, because the math proves that is not the case often enough. To make this correlation assumption without looking at the math is dangerous to your trading account.

DAILY CHART

US Dollar Elliott Wave Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

Give the bearish engulfing candlestick pattern weight, because this suggests the Elliott wave count is wrong for the short term and a reasonable pullback or consolidation may develop about here.

The upwards trend here is extreme. Look out for a turn.

This analysis is published @ 03:00 a.m. EST.