The USD has rallied in five waves from it's low (79.03) established on 12/31/10. The decline in the dollar was expected and given the negative correlation between equities and the Dollar, the stage may be set for further advances in the ES_F.
One word of caution. The market has made three distribution days since the beginning of trade in 2011. Distribution occurs when supply (sellers) are outstripping demand ( buyers). I have labeled each distribution day (when trading volume is heavy when price declines or when little upward progress has been made (churn). When distribution occurs, it's a prelude to a drop in price that may come days or even weeks later. Distribution by itself is not a stand alone buy or sell indicator but it is a tool that I use to confirm topping price action.
Although the wave count suggests higher prices, the fact remains that this market is way extended and a significant correction is long overdue.
Best of Trading
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