For U.S. dollar, it's not easy being green: when TA predictions don't make sense until days like today

The dollar was "in the green" today, pushing positive after falling sharply on Friday. Readers know I've been discussing the chart potential for the U.S. dollar to continue pushing upward into late May. Even though that hasn't "made sense" from a fundamental standpoint, it's been in the charts - in the form of a Fibonacci analysis and one Elliott Wave potential I've been describing. Other Elliott Wave analysts have been talking in terms of a third wave up that would take the dollar strongly higher, or alternatively expecting the dollar to descend much lower as gold skyrockets in its own third wave up. Of course, their scenarios could still happen, but to my eyes, my Elliott Wave diagonal idea seems to remain in play. This includes the "zigzag" nature of the move up. Keeping it simple, so long as the dollar remains above the uptrending channel line that it rose from again today, it remains possible for it to play out the diagonal scenario for some weeks longer. Moving above last week's high will help confirm it, while moving under Friday's low would negate this scenario.

Notice that all this has been based simply on chart analysis of the wave structure, although somewhat influenced by corresponding wave structure potentials in the euro and even gold. It hasn't been based on the fundamentals, and indeed the fundamentals called for a weaker dollar. News reports trumpeted these reasons when the dollar had precipitous falls, as occurred several times in recent months (as you can see on my chart, below). It's sad in a way that technical analysis can point to the dollar rising, and then on a day like today it takes bad news to fill in the fundamental "reason" for the dollar to go up. Here's one headline about the dollar today: Dollar's reaction to swine flu temporary? (Global Forex Trading, Apr 27, 2009) - "The US dollar has strengthened against all higher yielding currencies on the fear of a global health pandemic." Of course, the article's question remains valid, is this a temporary rise? Maybe it depends on how you define "temporary." I already stated that falling under the trendline anytime soon would negate my hypothesis of the diagonal upward into late May. Now, if my diagonal idea proves out over the next month with a high perhaps at or just above 92, then I'll be looking for the dollar to roll over and head down much more seriously. The only other scenario that would not have the dollar dropping seriously lower, either soon or after late May, would be that idea of the dollar positioning for a massive third wave up - if that happens, we'll know because it would then move strongly above the uppermost trendline on my chart instead of exhibiting a reversal pattern from that upper trendline in late May.

I've considered that massive third-wave up idea for the dollar, as advocated by a certain Elliott Wave group, and I don't find it to be the best "fit" for the structure on the dollar's chart. I also feel that it doesn't really fit the gold chart (and maybe not the yen chart), because I have the sense that gold will be taking off at some point and that's likely to occur with the dollar moving down when it's ready to roll over. But at least we know a parameter to look for, as I mentioned - observing the dollar's reaction if and when it may meet my upper trendline on my chart.