USDX & Euro$- Where from here?

Anyone who has followed this blog knows that using reaction line theory and reaction reverse/forward counts (as per John Cranes book) (plus a general mix of all reaction line methods out there) i came up with the chart of the DX below back in September . I have been trying to look for a bottom on the USD. Ironically I originally started this blog last winter because i thought the USD was too strong and was this time last year i was looking for a potential reversal area and thought i saw the first signs of a top then. Please understand i do not really care if the USD goes up or down as long i can see a strong and healthy trend to trade and it is no problem to be wrong, and i am often wrong but have spotted many of these reversals before and found this case and evidence quite compelling. I have followed the USDX down just through the first supporting RL until what i thought was the logical reversal date last Monday . After a bizarre candle in the DX last Sunday evening (which is cause of some concern to me- remember USDJPY and USDCHF last spring? we seem to get these type of bars during periods before sharp moves and increased volatility and volume) price rallied over the reaction line that has done such a good job at restraining any upward movement for months. Then we saw price peak at 78.50 with a possible double top formation. This was not what i expected from a freshly reversed market and also Fridays Euro strength took me by surprise. So i have been asking myself where are we now going? Is this really a reversal or is this a correction before further USD weakness? ie the Elliot 'Ravers' A-B-C before a continuation in trend. If it is a correction/ retracement then its not much of a correction since we have come almost vertically up from 1.2650 this September with no really serious setbacks and even the drop back down from the high at 1.41 back to 1.37 is well under a 38.2% Fib RT .
After spending time this weekend pouring over charts i have gone back to basic forks in the charts below and looked at market behavior. Any further price rises and new highs for the Euro$ or falls for the USDX back below the RL would put my reversal theory in doubt and we are sitting bang on the RL and the grey LMLP. Fridays close was on the highs for the Euro at 1.3945 and earlier that day we saw price fail to get below 1.3800. It is beginning to look like a sideways range to me.
It maybe that i am impetuous and always expecting price to reveal its 'secrets' immediately and this is one of my weaknesses- however it could be that we will see price now move sideways in cyclic waves before a break down (or up)....Do you remember USDCHF at 1.1500 earlier this year? It had a similar pattern and behavior before it broke down- very sharply (actually it was a CL faulure on the daily chart). What really alarmed me on Friday was when i looked at the E-Signal Euro$ 60 min chart and saw the bounce off the mauve modified Schiff fork. That's what i call a "Touch 'n Bounce".....which it certainly has done. Maybe we will fill the previous 'mountain'? Maybe we will make a new (recent) high above 1.4080. One possible trade coming up would be a short position upon price touching the area of confluence of the blue CL and the two UMLP's of the mauve and black down sloping forks. However i never consider any position unless there is a RL setup and i am always wary of any position contrary to the trend especially if price is moving rapidly with big long bars/candles. This area of confluence would be the 1.4000 level which also has psychological importance as well. Further price falls in the DX would take price back under the down sloping RL. Of course it is not impossible that it could make it up through the RL again and maybe i expect too much to happen too quickly. However, I am concerned that if we see continued USD weakness early this week and if the DX goes down to the 76.50 level then i would not be surprised to see price collapse below the 76.00 and take out last Sunday/Mondays low. If that happened then it would be the end of any possible reversal from the upsloping RL in daily DX chart.
Lastly, look at the USDX 5min chart. In the other charts it appears price has fallen through the grey LMLP but actually it has closed bang on this line. Surely for a fork of this size we should see the price bounce from the first attempt to go down through it? Thats normally what happens and i have found the larger the fork ,the bigger the bounce. So maybe tonight Asia will open with the DX up off the lower grey parallel and the Euro down from Friday's close.






























Euro USD- Two views