I have included one Elliott Wave count of gold at the very end…it is not important to understand the wave count, just the implied direction, which should be hinted at the US Dollar Index. I was following a pattern for 5 years that changed due to one small thing that happened and was discussed for a few months now. Since it happened, it was a game changer and has important consequences for everything going forward. The Contracting Fibonacci Spiral that I discovered nearly two years ago is approaching its extended time post of May 21st, 2013 and if it extends further, the potential downside will be faster and see a compression in time for what the potential downside is. I would encourage everyone to at least read this article and try to understand the big picture, because it is one of the most important articles I have written in the past two years.
With the US Dollar Index taking out the critical level of 83.66 mentioned a few weeks ago, it invalidated the previous Elliott Wave count I had for the pattern since 2008 and required some restructuring. A significant amount of time was put into retooling the longer-term count, which will appear somewhat different, but it has very important implications going forward…the anticipated sharp rise in the US Dollar Index is going to happen right now, rather than later.
The monthly chart of the Canadian Dollar Index is shown below, with the lower 55 MA Bollinger band curling up, suggestive that a top was put in place. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in 1 and 2 and above the %D in 3. Based upon this chart and the confirmed up turn in the US Dollar, there appears to be at least another 12-18 months of weakness in the Canadian Dollar before any sort of a bottom is put in place. There is strong support at 95, 90, 85 and then 80…support very much follows a ladder approach and when one support level is broken, probabilities increase that the next lower level will be tested f. Canada is a resource country with a heavy portion of GDP from mining, forestry, oil, natural gas and Uranium. For the most part aside from base metals and precious metals, commodity prices are relatively firm. The Canadian Dollar is likely to slip to at least 90 over the coming 4-6 months….further downside really depends upon how much upward momentum lies in the US Dollar.
The daily chart of the Australian Dollar Index is shown below, with upper 34 and 55 MA Bollinger bands still rising, suggestive that further downward price action is likely for at least another 4-6 weeks. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in all three instances. Extrapolation of the %K in stochastics 2 and 3 suggest downside is likely over the course of the next 4-6 weeks. There was a price excursion beyond all three lower Bollinger bands, so there could be some reprieve for 2-3 weeks before prices again drop or this is part of a powerful downward trend. The next level of support of the Aussie Dollar is at 96…3 cents away.
The weekly chart of the Euro Index is shown below, with lower 21 and 34 MA Bollinger bands curling down with stochastics 1 and 2 in a downtrend, suggestive that further downward price action is likely. A head and shoulders pattern seems to be in place, with a measured move down to 122.5. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in 1 and 2 and above the %D in 3. Extrapolation of the %K in stochastic 1 and 2 suggest at least another 4-6 months of sideways to downward price action before any sort of a bottom is put in place.