In moving through the 1.00 extension we have been watching on the daily chart, the market has resoundingly stated that it wants to be a bull. Yes, this move through the 1.00 extension makes classifying this rally as corrective a much lower probability at this point in time. In fact, it bolsters the position that the dollar is still in the heart of a 3rd wave, specifically in wave iii of 3, and is still extending.
As we have been saying, if the DXY was truly going to put an exclamation point on the longer term bullish structure, wave iii of 3 should be moving through the 1.00 extension and targeting the 1.236 extension. This past week, we strongly moved through that 1.00 extension, and it seems we are on our way to the 1.236 extension approaching the 93 region. And, if we maintain the current uptrend channel, we should reach our target towards the end of January. But, our next resistance level will be the 91.75 region, which, if broached, should point us towards the 92.75-93 region next.
At that time, we can finally expect a larger pullback/consolidation in wave iv of 3 before heading to our next target region between 96-99. Ultimately, this 5 wave structure off the 2008 lows has us targeting the 106-111 region before all 5 waves are completed.
See my charts illustrating the wave counts on the dollar (DXY):
How to Prepare for CySEC’s New Tiered LeverageGo to article >>
ABOUT THE AUTHOR: Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader, a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.
If you wish to become a Guest Contributor, please get in touch with our Community Manager and UGC Editor Leah Grantz email@example.com