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DXY Elliott Wave View: Resuming Downside

|Includes: UDN, Invesco DB USD Bullish ETF (UUP)
Summary

DXY is expected to extend lower while bounces stay below 95.17.

Short term, bounce is expected to find sellers in 3, 7, or 11 swing against 95.17

Revised short term DXY (USD Index) Elliott Wave view suggests the decline from 6/20 peak (97.87) is unfolding as a double three Elliott wave structure. Down from 97.87 high, decline to 95.47 ended Minor wave W, and bounce to 96.51 high ended Minor wave X. Wave Y is unfolding as another double three Elliott wave structure of a smaller degree where Minute wave ((W)) ended at 94.47 and Minute wave ((X)) ended at 95.17. The Index has broken below 94.47 suggesting Minute wave ((Y)) lower has started. Down from 94.47, Minutte wave (W) ended at 94.09, and Minutte wave (X) is in progress to correct cycle from 7/20 peak before Index resumes lower. We don’t like buying the proposed bounce and expect sellers to appear after Minutte wave (X) bounce is complete in 3, 7, or 11 swing as far as pivot at 95.17 stays intact.

DXY 1 Hour Elliott Wave Chart

ABC Structure

According to Elliott wave theory, Zigzag is a 3 wave structure having internal subdivision of (5-3-5) swing sequence. The internal oscillations are labeled as A, B, C where A = 5 waves, B = 3 waves and C = 5 waves. This means that A and C can be impulsive or diagonal waves (Leading Diagonal in the case of wave A  or Ending Diagonal in the case of wave C). The A and C waves must meet all the conditions of 5 waves structure, such as: having an RSI divergence at the fifth wave, ideal Fibonacci extensions, ideal retracements etc.

As the graphic below shows, we can see what Elliott Wave Zig Zag structure looks like. 5 waves down in A, 3 wave bounce in B and another 5 waves down in C.

As the graphic below shows, we can see what Elliott Wave Zig Zag structure looks like. 5 waves down in A, 3 wave bounce in B and another 5 waves down in C.