Revisiting the USD

If you'll recall in my prior post USD path uncertain I suggested that we would very soon have a good idea of the future direction.

On 7/26 the dollar index futures /DX took out the lows going back to 6/3.  While this technically does not completely invalidate the bullish dollar case, I now count those odds as small.

I've now made my prior alternate count my primary count, and am thus calling the entire move off the early May lows a fourth wave rally, which is sideways in appearance.   A move below 72.86, or the May lows will put that to bed for good.

The more recent push lower, starting around 7/12 is continuing to look like an impulse wave, but has not yet counted out five waves.  We appear to be somewhere in a minor wave 4.  I've drawn a rectangle on the minuette chart showing the area which looks more like an a-b-c down, meaning that we still need 5.   There is certainly a lack of both amplitude and momentum in this push down.   If and when we get a fifth, followed by a three wave rally, that may be a better time to hunt for an opportunity.  If that fifth wave takes out the May lows, that will be an even better signal to look for a short entry.

Those are the things I can look at objectively.  Now, what is less clear, is how much downside in the dollar remains after the May lows are taken out.  Ultimately, I'm am bullish the USD, but that may have to wait till next year to play out.