Elliott Wave 5.0 "Reboot"

Friday, November 18, 2016

US Dollar Potential Bull Trap Review: 2008-2016

This week the US dollar created an upside breakout which many analysts can call a very bullish move.  I see the entire US bullish phase as a big 8 year or so bearish rally, not as some impulse soaring to extreme new record highs.  I love to see those big long spikes on the daily and weekly charts as any vertical move like that can never be maintained.  I see this as a potential "D" wave top in a Primary degree which the EWP book describes as a big bull trap and large degree "D" waves should always be sold when that peak arrives. 

If there are any futures traders that are presently in long positions, then you will get stung soon.  Of course you will also miss out on a great USD short trade at the same time.  No trader presently in a USD long position can stay long on the next trip down. 

There is always a huge amount of sell stops below any present price level, and once they get triggered all the bulls will turn into USD bears very quickly, as the stops get triggered in a domino like action. 

The entire USD bullish phase should eventually get completely retraced, and it may take a few years to complete, but the downward move should give us another zigzag in Intermediate degree. (5-3-5)

This "D" wave could also coincide very well with a Cycle degree top in stocks, so the USD bear market could signal the end of the stock bull market.  USD in a vertical position, along with stocks, and gold pointing down also can produce a massive reversal. At this time, I can see that this three way  trade setup should happen many more times.