At the end of this week, 13th January, three of the Wall Street big firms will publish their Q4 financials returns – Bank of America (BoA), JPMorgan Chase & Co (JPM) and Wells Fargo & Co (WFC).  This is important as it will give us an indication of whether the US is in a big bubble territory or is truly at the start of a golden era. The US Dollar Index is at the same price area as it was back in 1989 before it continued its depreciation.  As I show on the above currency chart and explain in my weekly video forecast (https://youtu.be/umOhCXSRnkQ), I see the end of a strong US Dollar for at least the short/medium term. A confirmation of a corrective down move will occur once the price will break the support (marked by the white line) that has been created from every retracement. I have purposefully ignored the breakout of that support (marked by the red circle) as that first red candle was a negative data on the US ISM non-manufacturing PMI and the other negative data was that more Americans claimed for unemployment back in the first week of November 2016. The big green candle with a long wick was due to the Presidential Election of Donald Trump.

When I then look closely at the technical structure of the US Currency Index I notice a completion of a 5 Elliott Waves Theory which implies that a corrective down wave is close. If my technical analysis is found to be correct, I then see an appreciation in the four major currency pairs – EURUSD, GBPUSD, AUDUSD, NZDUSD.

                                                                                                    EURUSD

I see the EURUSD from a technical point of view, to have completed a 5 Elliott Wave Theory cycle downwards with a possible Inverted Head & Shoulder, which is at present not yet completed or confirmed. A possible left shoulder (marked by the black colour) and head (marked by the yellow colour) is the only two part of this probably inverted pattern that we have at present so for the time being, I am speculating whilst waiting for the confirmation. One of the things I ALWAYS say in my London Live Trading Room is: the confirmation of this particular inverted pattern will occur when the price breaks the neckline (white line). As I mention in my weekly video currency forecast) before the buyers come into action and start buying, I am expecting a short period of selling so to create the right shoulder.

Trade idea: The first and most likely move at present is a sell trade opportunity even though it might end up being very choppy. I personally will wait for a buying opportunity as currently, the price is at the same level of the left shoulder.  Here is my question: will the right shoulder be the second Elliott Wave down correction before starting to buy with the third wave? As I don’t possess a crystal ball I will wait for the market to either bounce where the price is at present or confirm the second Elliott Wave. Once I have a clearer signal I will start getting involved in either the sell or buy with the traders in the London Trading Room.