The Dollar continued lower as our main wave count from our last analysis expected. The alternate hourly wave count was invalidated providing us with more confidence in the main wave count.

We may have seen a trend change today.  Our main wave expects to see the down trend continue while the alternate expects further upwards movement.

Elliott Wave chart analysis for the USD Index for 29th February 2012. Please click on the charts below to enlarge.

Main Wave Count

The dollar is seen within wave 3 blue to the upside.

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 wave (i) green complete.

Within wave (ii) green waves a and b orange are complete and that we are to see downwards movement within wave c orange to complete wave (ii) green.

Ratios within wave (i) green are: there are no adequate Fibonacci ratios for waves i, iii and v orange. Within wave iii orange wave 3 purple has no adequate Fibonacci ratio to wave 1 purple and wave 5 purple is .07 longer than .382 the length of wave 3 purple.

At 76.92 wave c orange would reach equality with wave a orange. This target falls in between the .618 Fibonacci retracement of wave (i) green and the .786 retracement of wave (i) green.

The trend channel is constructed about wave (ii) green by connecting the start of wave a orange to the end of wave b orange and placing a parallel copy at the end of wave a orange. We are likely to see wave c orange complete at the lower trend line.

Once wave c orange is complete and we see a breach of the upper trend line with a full daily candle above it, then it is highly likely that the correction for wave (ii) green is complete and that the Dollar is within the early stages of wave (iii) green.

Movement below 74.72 would invalidate this wave count as wave (ii) green may not move beyond the start of wave (i) green.

This main hourly wave count sees waves 1 through 3 purple within wave c orange as complete. If this wave count is to be correct then wave 4 purple has to be near to completion as it is very close to being invalidated. The structure for wave 4 purple sees it within the final wave of the upwards movement.

Ratios within wave 3 purple of wave c orange are: there is no adequate Fibonacci ratio for wave (3) aqua with wave (1) aqua and wave (5) aqua is .03 longer than 1.618 the length of wave (3) aqua.

The trend channel is constructed about wave c orange by connecting the ends of waves 1 and 3 purple and placing a parallel copy at the end of wave 2 purple. It is very typical to see a fourth wave overshoot the trend line, as we are seeing right now, before reversing.

We expect to see the downtrend continue once wave 4 purple is complete, it is however possible that price will continue higher invalidating this wave count. Our alternate hourly below may then explain what is happening within the Dollar.

Movement below 78.10 would confirm this wave count as the alternate hourly would then be invalidated.

Movement above 78.80 would invalidate this wave count as wave 4 purple may not move into the price territory of wave 1 purple.

Alternate Hourly Wave Count

This alternate expects that wave (ii) green is complete and that we have seen a trend change. It expects to see upwards movement within wave (iii) green.

Wave 5 purple is seen as an ending diagonal, although it is not the best looking ending diagonal which decreases our confidence in this wave count. Wave 4 purple is also not what we expected. If we have seen a sideways second wave correction then it is more likely that we will see a deeper fourth wave correction.

A ratio within wave (ii) green is: wave c orange is .07 longer than .618 the length of wave a orange. This adds some confidence to this wave count.

Movement above 78.80 would confirm this wave count as the main hourly would then be invalidated. This confirmation would be our first indication that wave (iii) green is possibly underway.

At 89.52 wave (iii) green would reach 1.618 the length of wave (i) green. Once more of the subdivisions within wave (iii) green are complete, then we may be able to calculate shorter term targets.

Movement below 78.10 would invalidate this wave count as no second wave correction within wave (iii) green may move beyond the start of the first wave.