USD is a Puzzle. I may have a Solution

By: Anthony_Cherniawski

There is a lot not to like about this Wave structure, but it may be that the decline is finished.  The decision to take this opinion is based on several factors.  But the main one was the following Bloomberg article that caught my eye:  “Hedge funds are close to calling it quits on the dollar’s best run in a generation.

Large speculators cut net bullish positions on the greenback to the lowest in almost two years last week. If they keep trimming at the current pace, those bets will be wiped out entirely by the end of the month. Currency options are signaling a less than one-in-four chance the greenback will extend its two-year, 25 percent surge against the euro in 2016, while against the yen the likelihood is less than one in 10.” 

The sentiment being reported here begs for a reversal.  In addition, a reversal at the Cycle Bottom is also an excellent indicator of a trend change.  However, the Cycles Model doesn’t call for a Master Cycle low until early May.  That is my quandary. 

What we may be looking at is a giant Triple Zigzag Wave [4], as seen in the weekly chart.  This would answer the riddle of all the overlap in the declining last wave.  It would also call for a brief rally, possibly to weekly Short-term resistance at 95.83, followed by yet another decline to weekly mid-cycle support at 91.21.  The additional reason I say that is due to the fact that DXY is has rallied to 94.40 correctively (possibly Wave [a] of an [a]-[b]-[c] correction).  I may revise the daily chart to reflect that outlook before the mid-Week Report. 

This also fits better with a severe decline in SPX through mid-May. 

Regards,

Tony

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