Diametric pattern is given by Glenn Neely as new pattern under Neo wave. This is very important pattern to understand as we are seeing it across the asset class.
USDINR has shown multi-year long Diametric pattern which is a 7 legged correction and it looks like a running Bow – Tie Diametric.
Below chart was published in the monthly research “The Financial Waves monthly update” on 9th July 2019
What is on-going with USDINR?
Figure 11: USDINR Weekly chart spot (published on 9th July 2019)
Following was published in the monthly research on 9th July 2019-
USDINR post forming high near 75 levels by the end of the year 2018, the pair hasn’t seen any momentum towards the same and drifting lower since then. The fall has been slower and in overlapping fashion from the highs of 75 and so it can be wave X. As per advanced concept of Elliott wave if the last rising segment is retraced back slower it generally results into complex correction formation involving x waves. This is the reason why we think the fall in USDINR will be limited and eventually the longer term uptrend should start i.e. INR can continue to deteriorate against USD for years to come but over short term we can see some appreciation.
This also suggests that there is no long term inverse correlation between equity market and currency since Nifty touched life time high levels near 12100 and USDINR is also near the high levels. There is short term high correlation but eventually the long term independent movement is seen in both the asset classes.
As shown on weekly chart of USDINR, prices are moving precisely within the blue channel which is working extremely well. The lower trendline support is near 67.50 levels and as long as the level of 71 is protected we can expect this pair to drift lower.
As per Elliot wave perspective, wave G of the Diametric pattern completed near the highs of 75 and the fall is in form of wave X. Till now prices have retraced 50% of wave G and further we might expect prices will retrace nearly 61.8% which comes near channel support. So post witnessing some consolidation we can see a move eventually lower towards ……… levels.
So, where is currency headed over short to medium term? Is the correlation between currency and stock market going to be established?
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