USDCHF and USD Index Could Be in Final Stages Of Impulsive Decline-Elliott Wave Analysis

By: Gregor Horvat | Fri, Oct 4, 2013
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USD Index

USD Index is back at the lows but downside could be limited if we consider a bullish divergence on the RSI and possible ending diagonal in wave (v) position. As such, bullish reversal could happen soon, ideally from around 79.50, at 200% extension level of wave (iv). Elliott Wave traders will also know that after every five wave move trend will reverse in the opposite direction in three legs. We can already count five waves down from August 2013 high, so reversal could be near.

US Dollar Index 4-Hour Chart

 

USDCHF

On USDCHF we have very similar scenario, five waves down with an extended impulsive decline from 0.9453 so market could find a low and reverse up in three legs. Support for current blue wave (v) that is in progress comes in at 0.8880/0.8900.

USD/CHF 4-Hour Chart


Impulse extension

Most impulses contain what Elliott called an extension. An extension is an elongated impulse with exaggerated subdivisions. The vast majority of impulses contain an extension in one and only one of their three actionary subwaves.

The fact that extension typically occurs in only one actionary subwave provides a useful guide to the expected lengths of upcoming waves. For instance, if the first and third waves are about equal length, the fifth wave will likely be a protracted surge. Conversely, if wave three extends, the fifth should be simply constructed and resemble wave one. In the market, the most commonly extended wave is wave 3.

Elliott Wave Impulse Extensions Idealized Chart

 


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Gregor Horvat

Author: Gregor Horvat

Gregor Horvat
www.ew-forecast.com

Gregor Horvat

Grega is based in Slovenia and has been involved in markets since 2003. He is the owner of www.ew-forecast.com, but before that he was working for Capital Forex Group and TheLFB.com. His feature articles have been published on: SafeHaven.com, FXstreet.com, Thestreet.com, Action forex, Forex TV, Istockanalyst, ForexFactory, Fxtraders.eu, Insidefutures.com, etc. He recently won the award on FXStreet.com for Best Forex Analysis in 2016. At www.ew-forecast.com he helps clients and educate them about the Elliott wave prinicple and how to label and track unfolding patterns in real time.  His approach to the markets is mainly technical. He uses a lot of different methods when analyzing the markets such as candlestick patterns, MA, technical indicators etc. His specialty however is Elliott Wave Theory which could be very helpful especially if you know how to use it in combination with other tools/indicators.

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