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September 14, 2004

Analysis on the US Dollar: An Important Juncture is Near
by Dan Stinson

Short Term Forecast - The US Dollar has been in a contracting triangle for the last 3-4 months as illustrated on the chart below. The final wave of this contracting triangle is playing out as wave (E) with the current trendline touch. We could see further movement along this trendline but should soon see a reversal from this point. A move above 90.4 would indicate a breakout to the upside and confirm the action as wave c up to the 95-99 area.

There is a possibility of further sideways action within the triangle, but space in the triangle is becoming limited and a breakout should be near. A break below 87.66 would be bearish for the upside count and further downside would be expected with this development. We are expecting the breakout to the upside as it corresponds with the inverse relationship to our Gold and Silver counts below.

While we have traced the wave (b) count down for the USD, we also have followed the wave (b) count up for Gold and Silver. The move up for Gold and Silver in wave (b) appears complete and the metals are now in wave [c] down. Conversely, the USD appears ready to move up in wave [c]. Once these [c] waves complete, there will be some excellent opportunities for Gold and Silver and many stocks that have dropped significantly since the beginning of this year. These stocks still appear to have further downside and will be highlighted as the opportunities become near. Currently we are expecting these opportunities in December 2004, but it will be determined by the triangle breakout timing and direction. A unexpected break below 87.66 for the USD would be bullish for Gold and Silver at that breakout point. The direction of the breakout of the triangle will be the determining factor on the direction for Gold and Silver. A move below the lower trendlines for Gold and Silver will also support the downside counts.

The breakout direction for the USD is the key at this juncture.
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The commentary and forecasts are updated daily, including intraday commentary and chart updates. Fibonacci pivot dates and cycle analysis is also included. The indices covered are the NASDAQ, DOW, S&P 500, Gold, Silver, HUI and the XAU. Additional charts cover the Nikkei, US Dollar (USD), 10 Year Treasury Note (TNX), IBM, Nortel, Microsoft, Ballard Power, Celestica, ATI Technologies, Biovail, Bema Gold, Newmont Mining and Agnico Eagle Mines.

Happy Trading!!!

Dan Stinson
Elliott Wave Chart Site
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