12/19 - DOLLAR REBOUNDS

The US Dollar Index finally found traction at the 78 handle, near a key fibonacci retracement level (61.8% of 71.31-88.19). Extreme oversold daily studies helped end a brutal third wave and underpin a counter-rally towards the 81 handle, approximately a 1/3 retrace. Once this corrective move (fourth wave) is complete, the fifth and final wave should target obvious support at 76.00. Expect near-term weakness while trading below the 20-day MA.

Strategy Summary: BUY AT 1.3764, TARGET 1.4144 1ST, STOP AT 1.3709

12/18 - EUR/USD'S RECORD GAINS

While I predicted a shift in momentum with the US Dollar by correctly identifying a Head & Shoulders topping pattern, I have been caught off-guard by the size and speed of the latest reversal.

The primary beneficiary has been the EUR/USD, registering it's largest one, two, and five-day gains. From a technical analyst's point-of-view, the latest move in the Euro has blown out all the chart readings and has what we call "gone parabolic."

The primary reason for this due to a fundamental shift. The Federal Reserve has lowered rates to historical levels and embarked on a path of quantitative easing. Meanwhile, the ECB has reminded the market of its reluctance to reduce rates further. This has enabled currency speculators to pour into Euro's, according to open interest and volume indicators provided by the Chicago Mercantile Exchange over the past few days.

So what now? Well, the EUR/USD is now in what is called a blow-off trend. A fast moving trend that is characterized by ascending trendlines. As of this writing, the third ascending trendline has now been breached. A sustained loss of 1.4460 temporarily relieves selling pressure (vs the USD) and according to my (Elliot) wave count, should set-up a consolidation pattern ahead of the next move within the current trend.

12/17 - SOLD EUR/USD AT MARKET

The US Dollar Index weakened further on the back of the suprising and desperate measures taken by the Federal Reserve. This triggered a move below the 50% retracement of the entire 2008 recovery to briefly probe a fibonacci retracement (78.6% of 75.89-88.46) this morning. Extreme oversold daily studies should buoy a corrective fourth wave towards the 81 handle, where a cluster of retracement levels lie. Due to alternation this fourth wave should be complex since the second wave (or B wave at that point) was a simple pattern. The fifth and final wave targets previous support at 76.00. Expect selling pressure to persist while below the 10-day MA.

Strategy Summary: SOLD EUR/USD SHORT AT 1.4388 FOR A 1.3928 (CORRECTION TARGET), STOP AT 1.4444

12/16 - PROBING POSSIBLE TRENDLINE SUPPORT

The US Dollar's continued weakness is now probing possible trendline support off the July & September lows, just above the 100-day MA. Oversold daily studies could buoy a temporary correction towards 82.13-83.20. Expect weakness to persist, however, while price-action remains below the 10-day & 20-day SMA's.

Strategy Summary: RE-BUY EUR/USD

12/15 - USD WEAKNESS CONTINUES

Last week the US Dollar Index completed an A-B-C correction, highlighting a Head & Shoulders top. CFTC COT (Commitment of Traders) data confirmed a substantial reduction in speculative long Dollar positions and judging by daily increases in FX future volume and open interest, big speculators are piling into the Euro. Today's continued weakness is nearing the 100-day MA, but should be temporarily supported by 82.13, where a key 50% retracement level and a 1.618 equality projection lie. Expect weakness towards the 81 handle (H&S projection) while price-action remains below the 10-day & 20-day SMA.

Strategy Summary: RE-BUY EUR/USD AT 1.3370 FOR 1.3868 (TGT), STOP AT (1.3312)

12/11 - LONG EUR/USD POSITION MEETS TARGET

The US Dollar Index has completed an A-B-C correction to highlight a Head & Shoulders top. Expect weakness to persist while below the 10-day SMA (now @ 86.10).

Strategy Summary: LONG EUR/USD FROM 1.2607, 1/2 STOPPED AT 1.2552 (-55 pips), 1/2 MET TARGET AT 1.3211 (+604 pips), FOR A TOTAL AVG GAIN OF 274.5 pips

LOOK TO RE-BUY EUR/USD

12/10 - LONG EUR/USD POSITION ADJUSTED

The US Dollar Index is once again probing 35-day EMA support. A sustained loss of latter immediately exposes the 85 handle, below which will confirm Wave C of the A-B-C correction. Wave A's equality target projects a move towards 84.00 and will highlight a Head & Shoulders top. Expect weakness to persist while below the 10-day SMA (now @ 86.40).

Strategy Summary: LONG EUR/USD from 1.2607 FOR 1.3211 (TARGET), STOP AT 1.2777

12/9 - 35-DAY EMA HALTS WEAKNESS

The US Dollar Index again found support at the 35-day EMA, halting recent weakness and more importantly delaying the ongoing A-B-C correction pattern. A loss of 35-day EMA support re-opens the 85 handle, below which will confirm Wave C. Expect dollar weakness while below 87.25 (the trendline connecting the Nov 21st & Dec 4th).

Strategy Summary: LONG EUR/USD from 1.2607 FOR 1.3112 (1st TARGET), STOP AT 1.2707

12/8 - WAVE B COMPLETED

USDX: Wave B is now complete. Below 85.00 confirms the A-B-C Correction pattern and targets 84.00 (equality projection). This also will highlight a Head & Shoulders top, if completed suggests significant weakness ahead. Clearing the trendline connecting the Nov 21st & Dec 4th could trigger a fresh phase of strength towards the 92 handle (long-term pivot).

Strategy Summary: LONG EUR/USD from 1.2607 FOR 1.3112 (1st TARGET), STOP AT 1.2707

12/4 - LONG POSITION ADJUSTED

The US Dollar Index has potentially completed wave B within an A-B-C correction. Below the 85 handle confirms this corrective formation and will also highlight a head & shoulders distribution pattern. Wave C is now projected to reach 84.00 (roughly 1.31 EUR/USD). Expect dollar weakness to persist while trading below the key fibonacci retracement level (78.6% of 2005 high - 2008 low) near 88.00.

Strategy Summary: LONG EUR/USD AT 1.2607 FOR 1.3112 (ADJUSTED TARGET), 1/2 STOPPED AT 1.2552, ADJUSTED STOP AT 1.2607

12/1 - LONG EUR/USD POSITION FILLED

Strategy Summary: LONG EUR/USD AT 1.2607 FOR 1.3285 (1st TARGET), STOP AT 1.2552