ELLIOTT WAVE ON THE USD
by Dan Stinson
E-WaveCharts.com
October 18, 2006

Short Term Forecast

The last update on the USD illustrated a brief move lower before a trend change to the upside. We saw that low occur as wave (C) down and the USD has moved to the upside since. The current pattern to the upside has now given us more information on how the larger advance will take place. We should still see a rise to the 94-96 area for the long term, but in the short we should see a rise to the 88 area, with a pullback in a larger correction to the 84 area before further upside. We also noted in the last newsletter that the DOW, metals and crude were at an important juncture. Three days after the last newsletter the DOW and metals rolled over. We were counting the advance as an ending diagonal for the DOW which was close to completion at that time. Our Fibonacci turn date indicated a turn was due on May 11th. As we know, the markets rolled over on May 10th and the metals on the May 11th. Our members were aware of this ending diagonal pattern and the Fibonacci date weeks in advance.

The first short term chart illustrates that a wave (4) pullback is in play, which will be followed by wave (5) up to the 88 area. Once wave (5) up completes, the USD should move lower to the recent lows in a larger wave [b] correction before further upside to the 94-96 area.

A substantial move above the 88 area would suggest that we do not see the larger correction and a move up in wave [c] is already in play. A move below 86.02 would indicate that the correction is in play.

There are few that do not expect further downside in the USD for the long term, but its how it makes it there is the important question. We should see a small advance before a pullback to complete wave [b]. Once wave [b] completes, we should see a rally in wave [c] of wave [II} up which will set the dollar up for the next decline in wave (III) down. This is where we should see the sharp steeper downside that is expected by so many.

Our charts for the CAD, EURO, Gold and Silver also support the count for the USD.

At this juncture we expect another advance in wave (5) to the 88 area. These charts are only a guide so that you can follow the action and watch for the expected topping action near the 88 level. The action could play out exactly as illustrated or it may need adjustments as we follow it through.

Happy Trading!!!
Dan Stinson

© 2006 Dan Stinson
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Contact Information
Dan Stinson
Elliott Wave Chart Site
Dundas, Ontario, Canada
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