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Elliott Wave Financial Price Forecasting

Two Reasons why the USD Dollar is in Decline

by WaveTrack International| December 18, 2017 | No Comments

Euro/USD – AUD/USD – Zig Zags Confirm US Dollar Decline

Conventional technical analysis is highlighting a ‘head-and-shoulders’ top formation in the Euro/USD beginning. The left shoulder at last August’s high of 1.1911. Its head at 1.2092 and the right shoulder into November’s high at 1.1961. This would allow a break below the neckline which is slanting left/right. This would result in a downside break below November’s low of 1.1554.

But Elliott Wave analysis is projecting a higher Euro/USD at the moment? Why?

The main reason for this is because recent declines across various USD dollar pairs have unfolded into typical Elliott Wave corrective patterns. To be specific zig zags! This implies additional Euro/USD strength/dollar weakness.

Zig Zags

Case Study 1: Euro/USD – the Euro/USD’s decline from the late-November high of 1.1961 into last week’s low not only unfolded into a typical three wave zig zag pattern, a-b-c subdividing 5-3-5 but it also adhered to fib-price-ratio measurements. For example, extending minute wave a by a fib. 61.8% to 1.1809 projects a terminal low for wave c to 1.1716 (log scale) – the actual low was 1.1717, just 1 pip from this idealised measurement! See fig #1. That’s not a coincidence! This confirms the Euro/US$ is set to resume its uptrend to a new higher-high and not break lower as indicated basis the ‘head-and-shoulders’ pattern.

EUR/USD - Elliott Wave Forecast by WaveTrack International

EUR/USD – Elliott Wave Forecast by WaveTrack International

The Fibonacci-Price-Ratio Factor

Furthermore, if this same decline was labelled as a bearish 1-2-1 formation, in other words, the preliminary sequences within a developing five wave impulse pattern, then the two declining sequences would be of different degrees of trend which would not hold any relative fib-price-ratio relationship. Because they did hold a relationship, this identifies the three wave sequence as a zig zag. This differentiation process is a WaveTrack proprietary technique we developed many years ago and it has proved successful over the term.

Case Study 2: AUD/USD – the Aussie$ has declined from September’s high of 0.8126 into last week’s low of 0.7501 into another perfectly formed zig zag pattern. Don’t forget that this zig zag began at the exact time the Euro/USD began its correction from 1.2092 but whereas the Euro/USD ended its larger zig zag in early-November, the AUD/US$ only completed last week. But now they’re synchronised! Extending minute wave a to 0.7733 by a fib. 61.8% ratio projects a terminal low for wave c to 0.7500+/-. The actual low traded to 0.7501 – again, just 1 pip deviation! See fig #2.

AUD/USD - Short-term Elliott Wave Forecast confirms USD Decline by WaveTrack International

AUD/USD – Short-term Elliott Wave Forecast confirms US Dollar Decline by WaveTrack International


The ‘pattern-integrity’ or ‘qualitative’ attribute of these two zig zags is corroborated by the ‘quantitative’ element of fib-price-ratio measurements. Both patterns have ended downward corrections which now points towards another period of US$ dollar weakness, lasting the next month or two. Negation can only occur below last week’s lows, and that seems unlikely.

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WaveTrack International is a financial price forecasting company dedicated to the Elliott Wave principle and work of the R.N. Elliott. Clients include Investment Banks, Pension Funds, Total/Absolute-Return/Hedge Funds, Sovereign Wealth Funds, Corporate and Market-Making/Trading institutions and informed individuals -- & just about anyone who is affected by directional price change.

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