Dollar, Dow and Deflation

Crowd behavior trends and reverses in recognizable patterns and in turn affects free market price behavior. The model that recognizes as much is the wave principle (commonly referred to as Elliott Wave). The following charts and accompanying analysis expand on the June 18th Equities and Carry Trade Topped report. The interpretation of multiple markets’ price patterns indicate that the deflationary environment experienced in the summer and fall of 2008 has returned. There are several ways that Forex participants can take advantage of the situation, most notably through buying the US dollar and/or shorting carry trade currency pairs.