Dollar index is moving as per the previous updates with a minor change. What we earlier thought to be wave 3 and 4 turned out to be extensions, i.e. another wave 1 and 2. Essentially, we are going to do something like 1-2-1-2-3-4-3-4-5 (9 legs in total). There can be further extensions too but let’s take it one step at a time.
If you’re wondering why I changed it then the reason is originally thought wave 4 overlapped with wave 1 which confirms that it’s not 3 & 4, but rather 1 and 2. Note that as per Elliott Wave principle, wave 1 and wave 4 can never overlap (except in diagonals but diagonals occur during start or impulse so we can rule that possibility out).
So where does that leave us? Well, extensions means that there would be 3-4 followed by another 3-4 and 5. This would potentially take us to much higher levels in DXY than initially thought. Difficult to predict the actual levels since we don’t know how much wave 4s will retrace but it would be reasonable to consider a possibility that we might hit 120+.
Right now, we are in minor wave i of first wave 3 and should expect a pullback soon in minor wave 2. 20 DMA, currently at 111.318 could provide support to wave ii before it take off higher in wave iii of 3.
