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Figure E1. Wave counting on the monthly chart. Variant 1.
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Supposedly the dollar’s global decline is of zigzag mode, in the form of diagonal triangle or triple zigzag and currently the ending zigzag [A]-[B]-[C] of V is forming. What shape wave [B] of V will assume isn’t known yet. But judging by the amplitude of wave (B) of [B], it may be an expanding or running wave flat, and also some variation of extended wave correction.
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Figure E2. Wave counting on the weekly chart. Variant 1.
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But if we consider wave (B) of [B] as a counteractive wave of a large wave pattern [B], then such a wave may develop only in a corrective mode. From this point view the variant of counting wave (B) of [B] in the form of ordinary zigzag seems to be interesting.
If the supposition is true to complete the second leg of zigzag — impulse C of (B) the price should form ending waves [iv]and [v] of C of (B). As a distinctive feature of this scenario we may suppose that wave [iv] mustn’t be deep and won’t leave the territory of wave (iv) of [iii] of C of (B) until zigzag A-B-C of (B) completes forming.
Otherwise the whole downward section of last 2 years may appear to be not the supposed incomplete corrective structure but some completed trend pattern, for example an impulse.
From the point of view of the wave theory such a variant of scenario is quite possible and is considered below, in the context of scenarios 2 and 3.
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Figure E3. Wave counting on the monthly chart. Variant 2 and 3.
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Figure E4. Wave counting on the weekly chart. Variant 2 and 3.
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It is the possibility to present with minimum strains the upward section of the chart since the end of 2005 in the form of a completed impulse (see Figures E3 and E4) that allows to take it for either the first wave (1) of the second leg [C] of zigzag V — scenario 3, or entirely for the ending leg [C] of zigzag V — scenario 2.
If wave [v] of 5 doesn’t decide to form an upward extension, then as a distinctive feature of scenarios 2 and 3 we may suppose that the price will break out the territory of wave (iv) of [iii] of C of (B). Besides in case scenario 3 proves to be true forming of the so called Elliott’s double retracement isn't ruled out (blue dashed arc in Figure E4).
Note
This report reveals the analyst opinion of the situation at the moment of its release. This report is subject to change, it will be reflected in daily analyses or in additional articles in Wave analysis.
It should be remembered that EWA forecasts show probable price movements.
Abbreviations
«Annual-08» — «Annual Wave Analysis, 2008»
«Monthly-1207» — «Monthly Wave Analysis for December 2007»
«Daily-280406» — «Daily Wave Analysis for 28.04.06»
Reference
Dmitry Voznuy
forDmitry@yahoo.com
January 20, 2008
When using any part of the article for publication or analytical materials reference to the author and Alpari is obligatory.
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