Elliott wave Analysis of USDCNH & DXY

DXY Analysis

The recent sideways gyrations appear to suggest a triangle has been developing. It’s either completed the triangle for wave 4 and now in wave 5 to take prices higher towards 96.00 – 96.75, or a small dip will be seen for wave [e] of an alternative labeling to end the triangle for wave 4, to then setup for a thrust to the upside for wave 5. Whilst it’s above 93.71, I am favoring further upside and new highs above the highs that were made in Jun 2018. Ideally a move above 96.00 is seen to end wave 5 and complete an impulse wave from the Feb 2018 lows. Its then Traders and Investors need to consider getting out of the US$ as a significant correction is likely seen.

Expect the media to hype up the US$, that’s usually the way it happens at the end to a trend, especially as a market is finishing a 5th wave of an impulse wave. Sentiment should be extremely bullish as the market likes to get most people thinking the trend can never end, just before the market pulls the rug any reverses.

The media is always late to the party. So as the DXY makes a new high for wave 5, we should see the EURUSD make new lows below 1.1500, ideally target the area between 1.1400 – 1.1450 to end its respective 5th wave to end an impulse wave from the Feb 2018 highs.

USDCNH/CNY Analysis

I am also tracking a very similar wave count on this pair. This pair appears to be already in 5 wave of an impulse wave from the Mar 2018 lows. As I am expecting the USDCNH/CNY to continue to push higher towards 6.800 – 6.850 the DXY should eventually join this pair and move higher. Once both the DXY and USDCNH/CNY have ended their respective 5th waves and appear to complete the larger impulse waves from the 2018 lows, its then Traders and Investors would need to think about lighting up their long US$ positions and potentially looking at the short side.

In summary, more upside is still expected to end their respective patterns, but Traders and Investors would do well to think about scaling out of long positions as the markets head higher. Take note of any stories in the media about both markets.

Remember, the media usually starts to highlight a market, just before a turn, they are generally late to the party.