US Dollar crash? Not so fast, perhaps the exact opposite…

If you are one of those precious metal investors or traders who have bought into the idea of an unstable US Dollar, may be your moves are premature to say the least. Buying precious metals is a good investment at any economic condition. Only if you do it as a long-term investment. But for trading purposes, weakness in the US economy and Dollar, will stay a myth for months to come. Simply put, the Elliott wave counts of major pairs on weekly charts forecast a soar in price for the USD.

Dollar index

usd-index-weekly-chart-23-10-2016

Will this be the wave that breaks out of the correction? I really don’t know. Because there is a possibility of another bearish corrective wave (projected in dotted arrows.) However the important take away from this wave count is that there is a big bullish impulse due. Whether the market is already in it or the correction will continue for another bearish wave is a different question altogether.

But this wave count guarantees that the US dollar is not likely to crash anytime soon. In fact the opposite – a strengthening US dollar is almost certain.

EURUSD

eurusd-d-wave-analysis-major-pairs-24-10-16

Arrows shown on the chart have no significance except for direction. Having said that, do you see any inverse correlation to the dollar index? Even with a dominant currency like the Euro in a cross, the long term perspective of EURUSD has very little difference to an inverted Dollar index.

If for some reason, EUR starts to weaken on its own while the USD keeps strengthening, we might see compounded effect on the EURUSD. Which means EURUSD could decline faster than the Dollar index would soar. On the other hand if the EUR is to strengthen alongside USD, the anticipated EURUSD bearish wave will be more corrective in nature than a real impulse. Nevertheless, the anticipation is for a bearish impulse that should last for at least a few months.

GBPUSD

gbpusd-w-wave-analysis-major-pairs-24-10-16

GBPUSD has been a difficult pair to keep count, specially after the Brexit and more recently the flash crash. The problem is the unprecedented sideways conditions that seem to last way more than anticipated. Throughout the ongoing bearish trend, there were plenty of prolonged corrective phases.

Although with more downside to come, the cable is in my opinion the only exception that does not have a strong bearish forecast to support the case for a strengthening US dollar. May be after Brexit the British pound is behaving more and more in sync with the Dollar than against it. Perhaps the GBP as a currency, too has similar intentions to that of the USD for the foreseeable futur; in which case GBPUSD will go underway turbulent and choppy market conditions.

USDJPY

usdjpy wave analysis

This is the best evidence in favour of a strengthening Dollar for months to come. Of course, such a massive bullish wave in the context of a weekly chart, shall have influence of a heavily weakening JPY as well. However, such a move becomes almost impossible without a strengthening US Dollar.

Conclusion

You might wonder that the markets do not have to follow a certain direction just because some wave count say so, right? Well it actually works the other way around. The wave principle is based on isolating repeatable patterns in a “historical” price chart. A price chart by definition includes historical price. So there is nothing futuristic here. However, these isolated chart patterns and their nature can provide clues for subsequent patterns or waves to come. A small window to the future, a subjective yet repeatable approach to forecast any market.

This justification of the wave principle was necessary, because all evidence I have provided are based solely on wave counts. Apparently I have not considered economic conditions, fundamentals or other thousand and one variables that influences the fluctuation of USD or any other currency discussed here. Besides this is not financial advice for you.

It would be ridiculous to say my forecasts will be 100% accurate. Because no one can predict the future. The only thing I can assure you though is; “according to the wave principle,” a crash of the US dollar is nowhere near. In fact the exact opposite is true. Based on the analysis of the Dollar index and major currency pairs, the USD should perform better for months to come, perhaps throughout the whole year of 2017 as well.

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