US DOLLAR INDEX SHOULD NOW CORRECT ITS SIX MONTH ADVANCE

My blog on the CRB Commodities index last week concluded that the decline from its June high was probably terminating after its 15.5 percent decline. Today I want to talk about the US Dollar Index because it has risen 11.4 per cent from its May low and has been the main reason for weakness in commodities. It would be safe to say then that if the CRB Index was oversold and ready to bounce, evidence of a top in the US dollar index would lend support to the idea that commodity prices should rally. So take a look at the daily chart of the USD index below...it is apparent (to me at least) that the advance from the May low has unfolded in five waves which ought to be followed by a three wave correction...the top of wave 5 seems to be tracing out a head and shoulders top and a dip through 87.50 would open the way to violate the uptrend and teat the bottom of wave 4 at 84.50. The technical picture shows InvesTRAC's short term direction indicator has turned down from an overbought situation with the forecaster showing weakness could be expected until the last week of December. So the stage is set for declining dollar and rising to soon get underway.