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