Back in the States last night and spent the entire day today getting caught up and updating the wave counts. Heading into next week, I am focusing in on the wave structure on the 3-hour Dollar Index chart that is sloppy, choppy, and filled with overlap. This indicates a correction that should be resolved on the upside in the beginning of a new purple wave .III trend. Notice I have a .786 retracement of the b-wave that could be tested around March 16 on the London open.



The S&P market is up approximately 10% in the past 4 sessions, which is leading to this US dollar weakness. But before you get too excited about a possible stock market bottom, keep in mind we are moving higher in purple wave .IV that should hold below 804, before a return to the lows in purple wave .V of blue wave V at around 630.

Your inter-market analysis suggests a nice agreement between higher equity prices in the next few days will allow the dollar to move lower to complete purple wave .II before a resumption of the uptrend . Should the S&P roll back over from 800, dollar buying from risk aversion will return, sending EUR/USD lower.



Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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