The US dollar index ($DXY) confirmed a new major (long-term) downtrend in early December as it moved to a new 4-month low below 104.64. However, $DXY is also nearing a possible reversal into a secondary (intermediate-term) uptrend on its weekly chart, a move that would be viewed as Wave B (second wave) of the 3-wave major trend. Theoretical Positions: Traders may have shorted the dollar on the move to a new 4-month low, with the next downside target 102.00. New or additional sales could be made if/when the dollar moves into a Wave B rally.
The euro (^EURUSD) posted a new 4-month high during November, confirming a new major uptrend. The upside target area is between 1.06108 and 1.12746. The weekly chart shows the euro could roll over into a secondary downtrend, a move that would be considered Wave 2 of the major 5-wave uptrend pattern. Theoretical Positions: Traders could be long the euro from the September close of 0.98024 based on a bullish crossover by monthly stochastics last the end of that month. Additional longs might’ve been established in November when the euro moved to a new 4-month high. Longs could be added on a Wave 2 selloff.
The euro/Canadian dollar (^EURCAD) is also in a major uptrend that began with the bullish spike reversal during August. The EURCAD has already taken out the initial upside target of 1.4061 with the next up at 1.4427. Theoretical Positions: Traders could be long from the August close of 1.31904 with an initial stop below that month’s low of 1.28762. Additional longs might’ve been established with the new 4-month high beyond 1.36955 during November.
The Canadian dollar (^CADUSD) extended its new major 5-wave uptrend during November, hitting a high of 0.75597 before closing the month at 0.74545. Theoretical Positions: Traders could be long from the October close of 0.73395 with a stop below the October low of 0.71550.
The Brazilian real (^BRLUSD) remains in a major sideways trend. Theoretical Positions: Traders might be selling options to take advantage of the range between July low of 0.18131 and August high of 0.19949. Otherwise, new positions will depend on a breakout of either side of the range.
