In the previous article I wrote about the FXCM USDOLLAR Index I discussed the prospects of seeing a move back under the 11,634 level prior to the USDOLLAR index continuing it’s bull run into higher levels.  Since the time of that writing we did in fact see a move lower only to find support at the lower channel line that had been forming since May of 2015. We have now moved back higher and are now again testing resistance at the upper channel line. The next few trading sessions should be telling as to whether we will see a move back down prior to resuming the trend higher or if we will simply see a break over the 12,149 high without breaching the October 14^th low.

From an Elliott Wave perspective this consolidation pattern that we have seen since the May 13^th low could be viewed in one of two ways. The first of which is that the May 13^th low was the wave a of (iv) and this consolidation pattern was a b wave triangle after which we expect a c wave down to complete wave (iv) into the 11,600 area before continuing back higher in our larger degree bullish pattern. This is my preferred count at this time and is shown in white on the attached charts. Now with that being said given the strong push off of the October 14^th low we cannot rule out that this low was in fact a more significant turning point on the USDOLLAR index.

Under this alternate case in which the October 14^th low was indeed a more significant turning point in the USDOLLAR index then we would count the entire consolidation pattern that began on May 13^th as a larger running triangle in which the October 14^th low would have marked a larger degree wave (iv) low of the overall bullish pattern in the USDOLLAR index. Not only should we not breach the October 14^th low under this case but we should ideally stay over the 11,919 level if on all retraces before moving higher. This represents the 76.4 retracement level from the October 14^th low to the highs that we saw on October 29^th.

So while the bigger picture is still very bullish in nature as we can see on the more intermediate timeframe we the pattern is still not entirely clear. Of course given that we appear to be towards the tail end of this consolation pattern we should have resolution on the intermediate time-frame in the not so distant future.