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Elliott Wave Analysis: Gold Favored Higher Against 1306.96

Gold Short Term Elliott Wave view suggests that Intermediate wave (X) ended with the decline to 1306.96. Up from there, the yellow metal is rallying in 5 waves impulse Elliott Wave structure where Minutte wave (i) ended at 1337, Minutte wave (ii) ended at 1317.27, Minutte wave (iii) ended at 1357.12, Minutte wave (iv) ended at 1348.30, and Minutte wave (v) ended at 1361.72.

The 5 waves rally from 1306.96 to 1361.72 ended a higher degree Minute wave ((a)) of a zigzag Elliott Wave Structure. Minute wave ((b)) is currently in progress to correct cycle from 2/8 low in 3, 7, or 11 swing. The next extreme area in 7 swing comes at 1330.07 – 1334.15 where Minute wave ((b)) can end. Afterwards, as far as pivot at 2/8 low (1306.96) stays intact, expect Gold to extend higher. We don’t like selling Gold and expect buyers to appear at 1330.07 – 1334.15 area for a 3 waves bounce at least.

Gold 1 Hour Elliott Wave Chart

Attached Image (click to enlarge)

Attached Image (click to enlarge)

Baidu (BIDU) Resuming the Bullish Cycle

Baidu, Inc. (NASDAQ: BIDU) is one of the largest Chinese multinational technology companies specializing in Internet-related services & products and one of the premier AI leaders in the world.
Last week, Baidu has reported excellent results in Q4 which helped its stock to bounce +15%. Solid margin expansion and good developments on several fronts were on the headlines behind the recent rally which switched the opinion of many major investment firms to the bullish side.
We at Elliott Wave Forecast believe the market is ruled by the technical aspect and fundamental news comes in the second place to drive the price to a pre-determined direction. Therefore, we’ll take a look at the 4H chart of BIDU and analyse it using the Elliott Wave Theory.
BIDU 4H Chart 02.20.2018

Since October 2017 peak, BIDU did a typical 3 waves correction to the downside which reached equal legs area $211 – $198. Up from there the stock started a new cycle higher and looking to break above $275 peak later on to open a bullish sequence higher.
Currently, the stock ended 5 waves from the lows and expected to see another 3 waves correction which could take it back toward $230 – $218 area before resuming higher again. However, until the stock manage to break above October peak, a double correction lower can still take place.
To have a better perspective about BIDU, we’ll switch to the monthly chart :
BIDU Monthly Chart 02.20.2018

The Chinese giant Baidu, is showing an incomplete 5 swings bullish sequence from all time low which is different from the regular 5 waves move , as this advance is part of the double three 7 swings structure which suggest more upside toward the target at equal legs area $347 – $406.
BIDU seems to have already ended the 6th swing correction in red wave x and started the next leg higher. The move will support the rest of related technology stock and we expect the sector to see more upside in the coming years until BIDU achieve its target.
Consequently, after a break above October 2017 peak, BIDU will have a short term bullish sequence and we would favor buying the pullbacks in 3 , 7 or 11 swings whenever available.
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Elliott Wave Analysis: Gold Ending Correction

Gold Short Term Elliott Wave view suggests that the decline to 1306.96 ended Intermediate wave (X). The rally from there is unfolding in 5 waves impulse Elliott Wave structure. Minutte wave (i) ended at 1337, Minutte wave (ii) ended at 1317.27, Minutte wave (iii) ended at 1357.12, Minutte wave (iv) ended at 1348.30, and Minutte wave (v) ended at 1361.72.

The 5 waves rally also ended a higher degree Minute wave ((a)) of a zigzag Elliott Wave Structure. Minute wave ((b)) pullback is currently in progress to correct cycle from 2/8 low in 3, 7, or 11 swing. Minute wave ((b)) has reached 1323.39 – 1334.07 area where it could end. As far as pivot at 2/8 low (1306.96) stays intact, expect Gold to extend higher. We don’t like selling the yellow metal and expect buyers to appear at 1330.07 – 1334.15 area for a 3 waves bounce at least.
If pivot at 2/8 low (1306.96) fails, then Gold is doing a double correction in Intermediate wave (X). In this case, the yellow metal then can extend lower to 1289.48 – 1303.34 area where wave (X) can end and the rally resumes.

Gold 1 Hour Elliott Wave Chart

Attached Image (click to enlarge)

Attached Image (click to enlarge)

USDCHF Trade from 7 Feb 2018 Live Trading Room

USDCHF 1 Hour Elliott Wave Chart 2.7.2018

USDCHF shows an incomplete bearish sequence from 12.15.2016 high, favoring further downside. On Feb 7, we told members in Live Trading Room that we want to sell wave 4 bounce in 3, 7, or 11 swing at the blue box as far as pivot at 0.9668 high remains intact. Below is the initial setup we proposed in the trading journal:

We have since changed the target profit to 0.92, and the risk to reward for this trade becomes 2.4 to 1. We reached 0.92 target on Feb 12 for +219 pips profit. As we recommended to members, each trade should have maximum 1% to 2% risk. This means with 2.4 R:R, members made 2.4% to 4.8% profit, depending on the risk % taken.
We scan the market (78 instrument) and present the best trading ideas and execute trades using our unique system of 3, 7, and 11 swing. Join us in Live Trading Room everyday. Live Trading Room Group 1 starts at 6 AM EST / 11 AM GMT. Live Trading Room Group 2 starts at 5 AM EST / 10 AM GMT. You can also take 14 days FREE TRIAL without commitment and check our service completely FREE. In addition to Live Trading Room, you will get access to Elliott wave charts in 4 time frames, live sessions, 24 hour chat room, and much more.

Gold Swing Sequence from 12.2015 low

Chart below shows Elliott wave swing sequence up from 12.2015 low in black and red degrees and calls for more upside still. Now, let’s take a look at Elliott wave forecast of the move up from 12.2017 low

XAUUSD Elliott Wave Analysis – 4 Hour Time Frame
Yellow metal’s rally from 12.2017 black ((X)) low was a zig-zag which completed wave (W) at 1366. This was followed by a pull back which unfolded as W-X-Y and ended at 100% extension of W-X at 1307. 1307 – 1298 was a buying area and longs from there should now be risk free as we have already seen reaction higher from there as expected. We have labelled drop to 1307 as wave (X) and expecting Gold to break to new highs towards 1436 – 1451 area. Rally from 1307 low unfolded in 5 waves i.e. wave ((a)) and wave ((b)) pull back is currently in progress. As it holds above the trend line from 12.2017 through 2.2018 low, Gold should turn higher again to resume the rally.

XAUUSD Elliott Wave Analysis – Double Three Wave (X) Possibility
If Gold bounce fails below 1361.72 and it turns lower again or we get a break and hold below the trend line, then Gold should still be in wave (X) as a larger double three structure and could drop to 1303 – 1289 area where buyers should be waiting again for a rally to new highs above 1366 or a larger 3 waves bounce at least. As Gold has got 5 swings up from 12.2016 low, that means right side is the upside and hence why we expect buyers to keep appearing at extreme areas in the sequences of 3-7-11 swings and don’t like the selling.

Bitcoin Starts a New Leg Higher

We will take a look at the two different paths in Bitcoin in this video. After ending Super Cycle Wave (a) at $19666 high on Dec 17, 2017, Bitcoin started the correction in 3 swing as a zigzag (abc) Elliott Wave structure. The Super Cycle wave (b) is proposed complete at $5920.72 at the 123.6 extension of the abc correction from $19666. Bitcoin has started to move higher after ending the pullback, and below video shows the two different possible paths:

Bitcoin Elliott Wave Analysis Video 2.21.2018


Bitcoin Elliott Wave Analysis – 4 Hour Time Frame

After ending the Super Cycle wave (b) pullback at $5920.72, primary view is calling for the current rally as a 5 waves impulse Elliott Wave structure This view will get more validity if Intermediate wave (3) can reach 1.618 extension at $12205.05. In any case, another leg higher in Intermediate wave (5) is possible before the crypto-currency ends Primary wave ((1)) and do a larger 3 waves correction in Primary wave ((2)).
As an alternative, the rally from $5920.72 can unfold as a FLAT (A)-(B)-(C). In this scenario, then Bitcoin won’t make another push higher in Intermediate wave (5) and instead could start correcting the entire rally from $5920.72 in larger 3, 7, or 11 swing. We told our members to buy the Bitcoin dips at the Super Cycle (b) equal leg area at 6746.98 – 8755.87, and this position should be risk free already.
However, if currently without any position, we don’t recommend chasing Intermediate wave (5) and it’s better to wait for the larger correction to the cycle from 2.6.2018 low ($5920.72) before looking to buy the dips again in 3, 7, or 11 swing. Again, per the two paths above, Bitcoin can make one more push higher to end wave (5) of ((1)) before doing a larger 3 waves pullback in wave ((2)) to correct cycle from $5920.72 low. Alternatively, Bitcoin can end wave ((W)) as Flat without a new high and pullback in wave ((X)) to correct cycle from $5920.72 already. In both cases, we don’t like selling and prefer buying dips in 3, 7, or 11 swing as far as pivot at $5920.72 low remains intact.
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Trading The Amazon Stock The Right Way

Hello fellow traders, In this blog I want to share with you a trade in Amazon stock which we took in our Live Trading Room from Group 3. In Group 3 we cover stocks and ETFs.
Now, let us have a look at some past charts of the stock Amazon and the respectable entry in that stock.
Amazon 02.10.2018 Daily Chart Elliott Wave Analysis
We mentioned to members that Amazon could have ended the cycle from March 2016. And we knew that Amazon is doing a double correction in 3-7-11 swings. We said to members that this could be another good opportunity to enter the stock for a midterm trade. Therefore, we presented it in our Live Trading Room. You can read our blog of why world stock index has much more upside .Consequently, we said to members that the right side still remains to the upside in Amazon as well as.


Amazon 02.09.2018 60 minute Elliott Wave Analysis
In the chart below you can see our 1-hour chart of Amazon presented to members on the 02.09.2018. You can clearly see that Amazon was correcting the cycle which has been labelled as black wave ((W))-((X))-((Y)), targeting the areas of 1283.79-1241.90. Where we said to members that the correction can end in that area. Therefore, we presented it in our Live Trading Room as a possible trade. We wanted to buy Amazon in that blue box with an entry of 1283 for 3 waves bounce at least. In the second image, you can see our trading journal with the Amazon trade. As you can see we have a lot of good stocks and ETFs positions but I removed them to protect our client’s privileges.


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Trading Journal Screenshot (Trades have been removed to protected clients privilege)


Amazon 1 Hour Elliott Wave Analysis 02.17.2018
In the last picture below, you can see our 1-hour Amazon chart. As you can see, the market bounced nearly perfectly from our 1283.79 and rallied nicely to the upside. We are now already risk-free, which means we have a break-even trade in Amazon. If you also want to trade Stocks and ETFs with a tested and profitable strategy you can join us now here: bit.ly/EWF-FREE Type in the Discount Code “6637D4EDF8” and get 30% off on all plans.


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Elliott Wave Analysis: Gold Can do a Double Correction

Gold Short Term Elliott Wave view suggests that the yellow metal is still correcting cycle from 12.13.2017 low ($1236.30) as a double three Elliott Wave structure. Down from 1.25.2018 high ($1366.06), the decline is unfolding as a double three where Minor wave W ended at $1306.96 and Minor wave X bounce ended at $1361.81.

Minor wave Y is in progress and the subdivision is also unfolding as a double there where Minute wave ((w)) ended at $1324.75 and Minute wave ((x)) ended at $1336.21. Near term, while bounces stay below $1336.21, but more importantly below $1361.81, the yellow metal has scope to extend lower towards $1288.27 - $1302.28 to end Minor wave Y. Afterwards, expect Gold to resume the rally higher or at least bounce in larger 3 waves to correct cycle from 1.25.2018 high. We don't like selling the proposed pullback

For this view to be gain more validity, Gold needs to break below Minor wave W at $1306.96. Until then, there is no guarantee Gold will extend lower and the right side remains higher as the yellow metal still has 5 swing bullish sequence from 12.15.2016 low. We do not like selling the proposed pullback and expect buyers to appear at $1228.27 - $1302.28 (if reached) for a 3 waves bounce at least.

Gold 1 Hour Elliott Wave Chart

Attached Image (click to enlarge)

Attached Image (click to enlarge)

Elliott Wave Analysis: Gold Ended Correction

We revise our Gold Short Term Elliott Wave view to a more aggressive one and call the decline to 2.8.2018 at $1306.8 ending Intermediate wave (X). For this view to get validity however, the yellow metal needs to break above Intermediate wave (W) at $1366.06. Until then, the alternate view can’t be ruled out that the yellow metal can do a double correction in Intermediate wave (X) towards $1228.27 – $1302.28 before the rally resumes.

Up from $1306.8, the rally is proposed to be unfolding as a zigzag Elliott Wave structure where Minute wave ((a)) ended at $1361.72 and Minute wave ((b)) is proposed complete at $1320.60. Near term, while pullbacks stay above there, and more importantly above $1306.8, expect Gold to extend higher. We don’t like selling the yellow metal. If Gold breaks below $1306.8, then the yellow metal is doing a double correction in Intermediate wave (X) and opens extension lower towards $1228.27 – $1302.28 where buyers should appear for at least a 3 waves bounce.

Gold 1 Hour Elliott Wave Chart

Attached Image (click to enlarge)

Attached Image (click to enlarge)

Elliott Wave Analysis: Bullish against 1306.8

Short Term Elliott Wave view in Gold suggests the decline to $1306.8 ended Intermediate wave (X). However, the yellow metal needs to break above Intermediate wave (W) at $1366.06 to rule out the possibility of a double correction in wave (X). Up from $1306.8, the rally is proposed to be unfolding as a double three Elliott Wave structure where Minute wave (w))) ended at $1357.12 and Minute wave ((x)) is proposed complete at $1320.60. Near term, while pullbacks stay above there, and more importantly above $1306.8, expect Gold to extend higher. We don’t like selling the yellow metal. If Gold breaks below $1306.8, then the yellow metal is doing a double correction in Intermediate wave (X) and opens extension lower towards $1228.27 – $1302.28 where buyers should appear for at least a 3 waves bounce.

Gold 1 Hour Elliott Wave Chart

Attached Image (click to enlarge)

Attached Image (click to enlarge)

Elliott Wave Analysis: Gold in Double Correction

Revised Short Term Elliott Wave view in Gold suggests that the yellow metal is still correcting cycle from 12/13/2017 low ($1236.3) as a double three Elliott Wave structure. Up from 12/13/2017 low, Intermediate wave (W) ended at $1366.06 and Intermediate wave (X) pullback remains in progress as a double three. Down from $1366.06, Wave W of (X) ended at $1306.80 and wave X of (X) ended at $1357.12. Near term, while bounces stay below $1361.4, expect Gold to extend lower in wave Y of (X) towards $1288.1 – $1302.11 before the rally resumes. We don’t like selling the yellow metal and expect buyers to appear from the above area for at least a 3 waves bounce if not an extension to new high.

Gold 1 Hour Elliott Wave Chart

Attached Image (click to enlarge)

Attached Image (click to enlarge)

NFLX (Netflix) Elliott Wave: Showing incomplete Impulse sequence

Netflix stock symbol: (NFLX ) Short Term Elliott Wave view suggests that the decline from January 29.2018 peak 286.70 to decline to 236.16 low on February 09.2018 low ended Cycle degree wave IV. Above from there, the rally has resumed higher by a break above 286.70 high in Cycle degree wave V looking for more upside extension. Also, it’s important to note that the stock is having a bullish stamp in below 1-hour chart, which represents the incomplete bullish sequence to the upside. The cycle from 236.13 also looks to be unfolding as an Elliott wave Impulse sequence when each leg has an internal distribution of 5 waves with extension thus favoring it to be an Elliott wave impulse.
A rally from February 09.2018 low to 286.53 ended Intermediate wave (1) in 5 waves, where internals unfolded in Minor wave 1 at 257, Minor wave 2 ended at 249. Minor wave 3 ended at 285.81 and Minor wave 4 ended at 276.61. Below from 286.53 high the stock did 3 waves back and ended the Intermediate wave (2) pullback at 274.36 low as an Elliott Wave Zigzag structure. Above from there, the stock has managed to make a new high above 286.53 confirming the next extension higher in Intermediate wave (3) higher. Calling for more upside extension initially towards 299.43-304.25 ((v))=((i)) extension area to end the Minor wave 1 of (3) in 5 waves. Afterwards, the stock is expected to do a pullback in Minor wave 2 of (3) against 274.36 in 3, 7 or 11 swings before further upside extension towards 324.90-336.79 is seen in next couple of days. We don’t like selling it and prefer buying Minor wave 2 pullback when seen in 3-7-11 swings against 274.36 low in the first degree and against 236.16 low in the second-degree cycle.
NFLX (Netflix) 1 Hour Elliott Wave Chart

Keep in mind that the market is dynamic and the view could change in the meantime. Success in trading requires proper risk and money management as well as an understanding of Elliott Wave theory, cycle analysis, and correlation. We have developed a very good trading strategy that defines the entry.
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United States Steel Corporation $X Daily Elliott Wave View

United States Steel Corporation (NYSE: X) is the second largest steel domestic producer behind Nucor Corporation (NYSE: NUE) and also the world’s 24th largest steel producer.
Last year, Steel price surged higher reaching new all time high of 4772 in December gaining +60% before a correction took place. The price is expected keep rising in the coming years as the demand for steel in critical industries keeps increasing.

The world global steel production growth rate increased by 5.3% which is one of the major factors helping the related companies to continue its growth.


During this month, the United States Steel Corporation stock X price surged 30% breaking above 2017 peak as the move accelerated after the U.S. Department of Commerce recommended metal import tariffs for the federal government.
The current Elliott Wave count for the stock is suggesting a double three structure taking place from January 2016 low and it’s also showing an incomplete 5 swing bullish sequence from May 2017 low. Both bullish cycles have a target around equal legs area $53 -$62 and as long as the stock remain above the recent February low $30.9 then it should continue it’s move to the upside.
X Daily Chart 2.27.2018

Last year, despite X loosing more than 50% during the correction lower , we expected the stock to remain supported and continue the rally similar to the one from 2016 low as the commodity sector has ended a multi-year correction from 2011 peak.
X Weekly Chart 24.6.2018

The current expected move higher in X will be supported by the fact that the Dow Jones Iron & Steel Index DJUSST is also sharing the same bullish sequence from 2016 low and both instrument should be rallying together during 2018 before reaching the target higher then ending that cycle. Consequently, investors and trader can still look for buying opportunities in any steel stock like X or NUE in 3 , 7 or 11 swings.

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WHEAT (ZW #F) Forecasting Rally & Buying Dips

Hello fellow traders. Another trade setup we have advised to members recently is WHEAT (ZW #F). In this technical blog we’re going to take a quick look at the past Elliott Wave charts of ZW #F published in members area of www.elliottwave-forecast.com, explain the forecast and trading setup.
As our members know, WHEAT have incomplete and a bullish Elliott wave sequence in the cycle from the 8.29.17 low, suggesting further strength toward 473.6 +area. Consequently, we advised our members to avoid selling and keep on buying the dips in the sequences of 3-7-11 swings. Let’s take a look at the previous short term Elliott Wave forecasts.
WHEAT (ZW #F) 1 Hour Elliott Wave Analysis 2.20.2018
As we can see on the charts bellow, the price has ended short term cycle from the 438’6 low as double three Elliott wave structure. Wave (w) blue has wxy red inner labeleing. Currently the price is doing pull back against the mentioned low, wave (x) blue. Inner structure of ((b)) wave pull back is proposed to be wxy red Double Three , when wave y can see 451’0-447’6 area ( potential buy zone). In the mentioned area (blue box) buyers are expected to appear for further rally ideally or 3 wave bounce at least which should allow us to get in a risk free position. Invalidation for the longs would be below 1.618 Fibonacci extension : 442’5 level.

WHEAT (ZW #F) 1 Hour Elliott Wave Analysis 2.20.2018
We got proposed push lower toward our buying zone : 451’0-447’6 . ZW #F found buyers there and gave us nice rally. Members are enjoying profits with risk free positions. Now, the price has reached the extremes from the 444’6 low at 463’2-466’0. We expect to see 3 wave pull back before further rally resumes. Keep in mind market is very dynamic and short term view could have ended in meantime. If you’re interested in new trading setups you can find them in the membership areaof EWF.

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Elliott Wave Analysis: CADJPY within wave 5

Short Term CADJPY Elliott Wave view suggests that the decline from 1/5/2018 high (91.58) is unfolding as an impulse Elliott Wave Structure where Minor wave 1 ended at 88.48, Minor wave 2 ended at 89.63, Minor wave 3 ended at 83.824, and Minor wave 4 ended at 84.82. Minor wave 5 is currently in progress and the subdivision also unfolds as an impulse Elliott Wave structure.

Down from 84.82, Minutte wave (i) ended at 84.08, Minutte wave (ii) ended at 84.484, and Minutte wave (iii) ended at 82.94. Expect a bounce in Minutte wave (iv) which can end at 23.6 - 38.2% retracement of Minutte wave (iii) at 83.3 - 83.5 area before another leg lower in Minutte wave (v) of ((i)). Afterwards, pair should end cycle from 2/26 high (84.82) and bounce in Minute wave ((ii)) in 3, 7, or 11 swing before the decline resumes.

CADJPY 1 Hour Elliott Wave Chart

Attached Image (click to enlarge)

Attached Image (click to enlarge)

Wheat Trade 20 Feb 2018 Live Trading Room

Wheat (ZW_F) 1 Hour Elliott Wave Chart 2.20.2018

On Feb 20, Wheat (ZW_F) daily chart shows incomplete bullish sequence from 8.29.2017 low, favoring further upside towards 472.7 – 489. In the Live Trading Room, we informed members we like to buy wave (x) dips at 451.3 inside the blue box (see chart above) as far as pivot at 438.6 stays intact. Below is the setup we present in the trading journal:



We hit the 472.7 target on Feb 27 for $21.4 profit. With 1-2% risk / trade taken and 2.1 Reward vs Risk, members should make 2.1% to 4.2% profit, depending on the risk % taken.
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CADJPY Elliott Wave Analysis: Correction Expected Before Lower Again

Short Term CADJPY Elliott Wave view suggests that the decline from 1/5/2018 high (91.58) is unfolding as an impulse Elliott Wave Structure where Minor wave 1 ended at 87.785, Minor wave 2 ended at 89.439, Minor wave 3 ended at 84.468, and Minor wave 4 ended at 85.24. Minor wave 5 remains in progress as an impulse Elliott Wave structure where Minute wave ((a)) of 5 is expected to end soon.

Minute wave ((a)) of 5 is unfolding as an impulse Elliott Wave structure where Minutte wave (i) ended at 83.82, Minutte wave (ii) ended at 84.82, Minutte wave (iii) ended at 82.94, and Minutte wave (iv) ended at 83.65. Pair has reached the minimum target in price and swing to end Minutte wave (v) of ((a)) although another extension lower can’t be ruled out. Expect pair to bounce in Minute wave ((b)) soon to correct cycle from 2/21 peak (85.24) in 3, 7, or 11 swing before the decline resumes. We don’t like buying the proposed bounce.

CADJPY 1 Hour Elliott Wave Chart

Attached Image (click to enlarge)

Attached Image (click to enlarge)

DAX Elliott Wave View: Correction Ended


DAX is correcting higher degree cycle from February 2016. Short-term Elliott Wave view suggests that Primary wave ((X)) ended with the rally to 12597.51. Decline from there is unfolding as a Zigzag Elliott Wave structure where Intermediate wave (A) ended at 11725 and Intermediate wave (B) is proposed complete at 12270.50 high in New York earlier today. However, Index still needs to break below Intermediate wave (A) at 11725 to give validity to this view.

Zigzag structure is a 5-3-5 sequence and according to Elliott wave theory, after ending the first 5 waves, there should be a correction against the first leg in 3, 7 or 11 swings. The correction should then fail & extend in another 5 waves into the direction of first leg, i.e either Higher/lower. In DAX case, Intermediate wave (B) bounce appears complete at 12270.50, and Index should do another extension lower in Intermediate wave (C) lower.

The internals of Intermediate wave (A) unfolded as 5 waves Elliott Wave Impulse structure where Minor wave 1 at 12388, Minor wave 2 ended at 12515.5, Minor wave 3 ended at 11867, Minor wave 4 ended at 12006.50, and Minor wave 5 of (A) ended at 11725. Internals of Intermediate wave (B) unfolded as Elliott Wave Zigzag correction where Minor wave A ended at 12028, Minor wave B ended at 11942.5, and Minor wave C of (B) ended at 12270.50. Near term, while bounces stay below 12270.50, and more importantly below 12597.5, expect the Index to extend lower.

DAX 1 Hour Elliott Wave Chart

Attached Image (click to enlarge)

Attached Image (click to enlarge)

US Dollar at the Start of Multi-Year Downtrend


Since the US Dollar trades freely in the 1970s, on average it has rallied and declined in a period of 7.5 years. The chart below shows short term and long term US Dollar cycle:
Short Term and Long Term US Dollar Cycle

From the chart above, we can see that since 1970s, the cycle in US Dollar from peak to peak (blue color) is about 15 years on average. The 15 year peak-to-peak cycle is subdivided into 2 sub-cycles: USD weakness period (peak to trough) in red color, and USD strength period (trough to the peak), in green color. Each sub-cycle lasts roughly 7.5 years on average.
US Dollar currently appears to have ended the last peak on January 2017. The previous cycle in USD strength (green color) lasted from September 1992 – July 2001 for a period of 8 years 10 months. The latest cycle in USD strength (green color) lasted from March 2008 to January 2017, which is the same 8 years 10 months up-cycle compared to the previous one. The peak-to-peak cycle has also reached the average of 15 years.
If this cycle is going to repeat, then US Dollar appears to continue to get weak in red cycle (downtrend) from year 2017 to 2024 – 2025 before it starts a 7 year up cycle (green color) from year 2024 to 2031. What leads to the trend change in USD is a combination of valuation, current account dynamic, and the Central Bank Action like the chart below from Nomura shows:


Overvaluation
Based on the Purchasing Power Parity, US Dollar on average is 20% overvalued against other major currencies, including Yen, Euro, Pound, and Canadian Dollar. Valuation extremes usually suggest the US Dollar has gone too much and we have started to see the reversal lately and likely will continue to see it in the next few years.
Growing Account Deficit
The US current account deficit now is running at 3%. Current account is the total export value of the goods and services minus the total imports. In the last 30 years, when the US account deficit reaches extreme levels between 2.5 – 3%, the Dollar is close to reversal. The last time US Dollar reached multi-year peak at 1985 and 2001, the US also had a current account deficit of 2.5 – 3%.
Central Bank’s Action
In the past, we saw a divergence in the monetary policy and interest rate between the Fed and other central banks, causing US Dollar’s strength. For example, the Fed started tapering in 2013 and hiked the interest rate in 2015, whereas other central banks were still loosening policy. This divergence caused US Dollar to soar and appreciate against other major currencies.
However, global recovery caused other central banks to also unwind the loose monetary policy. The Bank of Canada has started to hike rate. ECB and BOJ have started to taper bond’s buying. This removes one major support for USD and makes the dollar vulnerable even if the Fed continues to hike further.
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Elliott Wave Analysis: USDJPY Correction Should Fail Below 107.9

Short Term USDJPY Elliott Wave view suggests that the rally to 107.9 ended Minor wave X. Pair is expected to resume lower while bounces stay below this level. Down from Minor wave X at 107.91, Minor wave Y is in progress as a double three Elliott Wave Structure. Minute wave ((w)) of Y ended at 105.23 as a zigzag Elliott Wave pattern. Above from there, Minute wave ((x)) is currently in progress to correct cycle from February 21 peak as a double three Elliott Wave structure in 3, 7, or 11 swing.

Internal of Minute wave ((w)) of Y unfolded as a zigzag Elliott Wave pattern where Minutte wave (a) ended at 106.35, Minutte wave (b) ended at 107.67, and Minutte wave (c) of ((w)) ended at 105.23. Up from there, internal of Minute wave ((x)) is unfolding as a double three Elliott Wave Structure where Minutte wave (w) ended at 106.46 and Minutte wave (x) ended at 105.43. Near term, expect pair to extend higher towards 106.66 – 106.95 area to end Minutte wave (y) of ((x)), then as far as pivot at 2/21 peak (107.9) stays intact, expect pair to extend lower. We don’t like buying the pair.

USDJPY 1 Hour Elliott Wave Chart

Attached Image (click to enlarge)

Attached Image (click to enlarge)