26 July Dollar Index Elliott wave analysis

The Dollar has been bearish this week. Will it drop further? The following 26 July Dollar Index Elliott wave analysis looks at what could happen next based on Elliott wave theory.

The USD is dropping this week, close to the 12000 handle and may drop further. From the larger perspective, dollar is at the verge of losing more than 250 points more. In this analysis, we will look at the long term and short term wave analysis of the USDX to drive home the point. The chart below shows the Daily chart wave analysis which was started from July 2011 – 7 years period.

26 July Dollar Index Elliott wave analysis: D1 chart

The impulse wave in blue started in July 2016 and ran up to 12630 in the last days of December 2016. The impulse wave was clear. According to Elliott wave theory, a 3-wave correction should follow. In January 2017, price dropped from 12630 and ran a bearish impulse wave (A) to 11500 in February this year. From 11500, wave (B) started. Wave (B) was expected to be corrective but the rally from February looks impulsive. The expected (B) will likely go higher as the rally from 11500 might take two more legs to complete a corrective pattern. If wave A of (B) has ended, price should falter in the next couple of weeks. The question is this: has wave A ended? Let’s look down to see the sub-waves of A.

26 July Dollar Index Elliott wave analysis: H4 chart

From 11500 where wave (A) ended, we have seen price advanced in a clear impulse waves. At 12170, it seems this wave pattern has completed and price should drop to around 11750-11700. The only concern here is the 5th sub-wave (circled) which has not yet completed a clear impulse wave or ending diagonal. In spite of that, a break below 12000 handle should confirm the presence of the bears and send price down for more 250-300 points.

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