Dollar Index and Nikkei Technical Analysis - May 15
The dollar index has formed a 5 wave decline that is overlapping like a wedge. This pattern is known as a leading diagonal and occurs in wave 1/A of a trend. So this marks a near term bottom from where the entire fall can be retraced meaningfully. Typically 38.2% up to 100 but mostly to test the wave 4 high at 101.28 close to 50% of wave A. In some cases we do get 61.8% which is near 101.74. After that wave C down is very swift. So this should be the last best rally for the dollar to 101.
The Japanese index making a new high now counts as impulsive and so it changes the markings from 2009 onwards into a 5 wave rise. We are in the 5th wave. This can have two efffects. Shorter term wave v=i can point to 20900 however the larger structure allows for a bigger move up. 5=1 is as far as 24000.
Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic & international clients. Views expressed in this article are purely of the author - Mr Rohit Srivastava - a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd