An EWT Look at the USD

Click on Chart

Above is a chart of $USD from stock charts, which is the US Dollar Index. I was just going over it for myself, but by the time I had a bunch of boxes on there, I thought I would just post it as well. For a quick recap of basic intermarket relationships, at least during this bear market, but fundamental in some ways as well.......

-The USD typically trends opposite to gold and oil prices, and commodities in general.
-During this bear market, the USD has had pretty strong negative correlation to the stock market. Major stock bottom have been at major USD peaks.
-A falling USD is basically inflation, and a rising USD is basically deflation/credit contraction

So when trying to decide what one market is telling you, if it is not clear, it can help to look at other strongly correlated markets to see if it is any more clear.

I posted a video on June 1st discussing sentiment on the dollar and Euro and the possible elliott wave patterns that were forming, and suggested a bounce or trend reversal was imminent in the dollar. Well the bounce came, but there is no way I can conceive of it as a trend reversal. I had suggested that if the downtrend completed at that time, then we were probably in the midst of a triangle before another huge move up in the dollar. I also suggested that we could be seeing a "flat" elliott wave pattern, and that is what seems to be most likely as I type this today. I won't go into all the details because most of them are on the chart above. Probably only interesting for anyone with EWT background.

Also, the nearest futures contract for the USD Index (and also the UUP, strong dollar ETF)
did break below the June lows today, but the cash index did not. However, the nearest futures rallied to close above them and formed a hammer candlestick. The UUP formed a bullish engulfing pattern. These divergences between nearest futures and cash indexes can often be telling and a form of divergence or non-confirmation. I would think that this is bullish for the dollar and bearish for stocks and commodities.

I think it is possible that the USD dollar bottomed today from the technical reversal, a doji formation at support, and today met some typical and minimum requirements for relations between waves 1 and 5. Now as a matter of logic, IF the above is generally correct, then after wave 5 bottoms, it must completely retrace itself in equal or less time than it took to form. So that's what I am watching for (for confirmation) in coming days/weeks.

The biggest negative I see in the analysis above is that wave 3 is not 161.8% or more than wave 1. The extended wave in a 5 wave advance should typically be at least that. However, everything else fits, and I don't see another good interpretation.