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Currencies , Trading

See Two-Plus Years of Spot-On Dollar Index Forecasts

by Robert Folsom
Updated: May 12, 2023

Welcome to Chart of the Day. I'm Robert Folsom.

"See Two-Plus Years of Spot-On Dollar Index Forecasts"

More than two years ago, specifically early January of 2021, the U.S. Dollar Index had declined to its lowest level since March 2018, although a certain key sentiment indicator at that time had reached a decade-long, bearish extreme.

What's more, the Elliott wave pattern for the Index showed a low at two degrees of trend, which is why our January 4 Short Term Update forecast said to subscribers:

"We anticipate a significant rally in the U.S. dollar..."

In turn, the Dollar Index low registered on January 6, and this 28%, nearly-two-year rally followed into late September 2022. Then at that time, we saw another strong indicator -- this time what you'd expect to see at a peak.

The "Magazine Cover Indicator" suggests that by the time a financial trend reaches the cover of a news magazine, that trend has been unfolding for so long that it's near the point of a turn. This late-September Bloomberg Businessweek cover showed the dollar smashing the euro and yen like a wrecking ball in a headline saying:

Can't Stop, Won't Stop.

We showed Short Term Update subscribers this magazine cover on September 30 and said:

"The U.S. dollar rally is nearing the point of exhaustion, which will lead to a significant trend reversal."

That's a bit of background on how we reached that late-September peak. Now, let's see what has fallen.

Here's the late-September peak. Here's the significant trend reversal that followed. This downtrend saw its intraday low on February 2. On January 27, the Short Term Update had said a low was near and told subscribers that:

"when wave five down is confirmed as complete, the U.S. dollar will undergo the largest rally since the September 28 high."

Confirmation came on February 3 when Short Term Update said:

"The Index is starting the largest rally since the September high."

And that is exactly what followed through March 8. On that day, Short term Update said the rally:

"has now met our initial target range of 105.631-106.152."

On March 10, Short Term Update reiterated that:

"The high on March 8 has met the objective to consider the countertrend rally complete."

And a month-plus decline indeed followed down to April 13. The next day, April 14, Short Term Update's analysis identified a potential triangle and told subscribers that:

"prices will then move net sideways until the triangle is finished."

Net sideways has followed in the month since.

And this is where I say not all forecasts work out like this, and that this is a still-unfolding pattern which anticipated all the important trends and turns in the Dollar Index for two-plus years.

For information on a Financial Forecast Service subscription, please see below.

The Pattern in the U.S. Dollar Index: Trends Move with Explosive Speed

You just it for yourself -- so please know that there's more to come. Right now and in the weeks ahead, the Financial Forecast Service will keep you two steps ahead of the pattern. You'll anticipate the risks -- and be ready to move on the opportunity -- when the right market juncture arrives.

Short Term Update, the monthly Financial Forecast and Robert Prechter's Elliott Wave Theorist can be your signal amidst the noise. Fast-moving, volatile markets are when Elliott Wave analysis is at its best. See below for more.