Dollar may see some short term downwards movement within a deep second wave correction.
The Dollar continued higher as our previous analysis expected.
We continue with our previous daily and main hourly wave count and also provide an updated alternate hourly count.
Elliott Wave chart analysis for the USD Index for 27 June 2012. Please click on the charts below to enlarge.
Main Wave Count
Within wave 3 blue waves i and ii pink are seen as complete. Wave iii pink is expected to be subdividing into green degree with waves (i) and (ii) green complete.
Within wave (iii) green we expect waves i through iv orange are complete. We have a number of daily candles above the upper trend line of the trend channel about wave iv orange and this significantly increases the likelihood of a trend change.
At 84.14 wave v orange would reach 1.618 the length of wave i orange. This is an early target which compared to the second target below is rather conservative.
A second target is at 85.16 where wave (iii) green would reach equality with wave (i) green. A more typical target is the 1.618 Fibonacci ratio of wave (i) green. We will keep this ratio in mind as the structure unfolds further.
Movement below 79.92 would invalidate this wave count as wave iv orange may not move into the price territory of wave i orange.
The hourly wave counts expect that the Dollar is within wave 1 purple of wave v orange. Within wave 1 purple waves (1) through (4) aqua are seen as complete. Wave (5) aqua is seen as an ending diagonal with waves 1 through 4 red complete.
This main hourly wave count expects that wave 5 red is incomplete and that we should see more upwards movement to complete wave a plum before short term downwards movement for wave b plum and then the final impulse to complete wave c plum and wave 5 red.
Movement above 82.70 would confirm this wave count as the alternate hourly would then be invalidated.
At 83.00 wave 5 red would reach 1.618 the length of wave 3 red.
Movement below 82.30 would invalidate this wave count as wave b plum within wave 5 red may not move beyond the start of wave a plum within the zigzag for wave 5 red.
Alternate Hourly Wave Count
This alternate hourly wave count is the same as the main hourly, but it sees wave 5 red and therefore wave 1 purple as complete.
It expects downwards movement for the Dollar within a second wave correction.
Movement below 82.30 would confirm this wave count as the main hourly would then be invalidated.
If this wave count is confirmed then we are likely to at least see the .5 retracement of wave 1 purple tested at 81.95, but more likely the .618 Fibonacci retracement of wave 1 purple at 81.77.
Movement above 82.70 would invalidate this wave count as no second wave correction within wave 2 purple may move beyond the start of the first wave.