I am "exploring" new ideas with the purpose of discovering a coherent EWP, which would suit with the complex corrective internal structure of the so far 7-wave up leg off the May 2011 lows.
What is obvious is that there is no way that we can count the price structure as impulsive. Therefore price is involved in some kind of countertrend move.
Basically a countertrend EWP includes: Zig Zag, Double Zig Zag or a Triple Zig Zag.
All the corrective patterns have to unfold a final impulsive or ending diagonal wave (C).
As I mentioned in my last follow up of the EUR last Monday: "The key issue remains to get the right count of the complex corrective down leg off the May 4 top. The main problem is that the internal structure of this large down leg, even if it is corrective at some point should unfold an impulsive wave (C), but so far in my opinion everything remains corrective. This problem could be solved if price instead of unfolding an impulsive wave (C) it traces an Ending Diagonal".
The same reasoning of drawing a potential path from evidence can also be applied in the case of the USD INDEX from the May 4 low.
This scenario implies that price is unfolding a potential Zig Zag (ABC), and the wave (C) tracing an Ending Diagonal.
The extension 1.618 target for the wave (C) is at 87.11
If the ED is playing out then at the June 1 high price has established the wave (III).
Even if we already have the required overlap of the wave (IV) below the wave (I) high, the assumed wave (IV) would have the "right look" with a larger pullback, but maintaining a converging sequence.
This scenario would be aligned with what I have been suggesting for SPX, since while the USD Index completes the ED with the wave (V), SPX should complete the wave (B) of the second Zig Zag of the wave (X) (From the November 2008 low).
