Posted on July 6th, 2009 at 10:00 AM 

As a new week of currency trading begins we'll look first at the Daily US Dollar Index to possibly identify any trends or direction which can assist in our short term swing trading this week.

The Dollar continues into the Wave 4 rally on the Daily Chart, while the Wave 4 high is labeled in early June the Elliott Oscillator has only now pulled back to zero signifying a true Wave 4.  It's important to note that just because Wave 4 has been established it does not mean that profit taking is complete, a Wave 4 has the potential to retrace to 61.8% which on the dollar is price of .8521.  Until that price level is taken out or one of our four Elliott Wave 4 rules have been violated (PTI, Osc Pullback, Wave 4 Channels, Fib Level) this market must be looked at as a down trend in a profit taking rally.

While this profit taking rally is in effect I will remain bearish on the Euro and Pound as long as we have continued upward movement on the Dollar.  To establish this I have drawn a simple trend line across the highs of the last swing, as you can see as of early this morning we have a breakout indicating a possible move higher on the Dollar.  I have also added a trend line across the lows, this acts as support and will let me know when the Wave 5 move towards new lows will begin.  As long as we stay above the Red Trend Line I will stay bullish on the dollar and bearish on the Euro and Pound.  With the breakout this morning it may be time to sell into a decline on the Euro and I will be watching for that this morning.

Remember, this is a weekly outlook and not my long term opinions on the currencies.  This is to help establish swing trading opportunities on the 60 and 180 minute charts.

I will update you to any trades that I see.

Ron Wheeler