(Elliott Wave) Scanning the Big Cycles: What to Watch on Stocks and the Dollar in 2026
(Elliott Wave) Scanning the Big Cycles: What to Watch on Stocks and the Dollar in 2026
Good day to everyone, and to all readers of ForexAnalytix.com. As you know, at the beginning of each year I always scan some higher degree time frame charts to look at the bigger cycles, so we can understand what to expect and what to be aware of rather than being surprised. If you were reading our work a year back, that was when I highlighted that the S&P 500 could see a pullback into the first half of 2025, before the market could stabilize and the dollar could resume lower.
This scenario unfolded very well, as you can see in this post here:
https://www.forexanalytix.com/blog/heres-the-only-2025-trading-preview-post-youll-need-to-read/
where I also highlighted the important resistance zone for a dollar top around the 108–110 area.
The question now is where we can go from here. Once again, I want to show just three charts that I believe could be the most important going into 2026. The first chart is the S&P 500. Looking at the daily chart, notice that from the April 2025 low we can clearly count five waves up. This does not mean that the fifth wave has to end right here, but it is important to understand that after five waves the market can start to slow down. There is therefore a risk of a correction, even though the fifth wave could still extend higher, possibly toward the 7200 area, before a reversal lower.
At the same time, look at the VIX index. It is sitting near the bottom of its range, showing very little fear in the market. That usually means one major cycle still lies ahead, a fear cycle, and while the timing is always uncertain, whenever it shows up it typically comes with a spike in VIX and a pullback in stocks. Together, these signals suggest that we may be in the late stages of this Elliott wave five-wave recovery from the April 2025 low. Opportunities will still show up, but it may be wiser to wait for clearer direction rather than chase prices here.
The next chart to look at is the US dollar. The dollar has already moved nicely to the downside, but when I look at the bigger picture, I do not see a strong bullish trend starting. Instead, it looks more like stabilization. Of course, there is still a chance for a stronger dollar recovery, especially if rates are put on hold for longer, or if we see a sharper sell-off in stocks, possibly coming from the AI space. Then rates will go lower but, dollar woudl diverge and bounce, more be like a “safe-haven” asset play.
Before calling any major cycle shift for the dollar, it is also important to look at positioning. The COT data shows that large speculators are heavily short the dollar, close to levels seen back in 2007–2008. We know what happened with the dollar after that period. I am not saying we will see the same outcome now, but based on sentiment, wave structure, and positioning, I think we need to be very careful and aware that the dollar could stabilize or even rebound for a period of time.
I hope you liked this content. Feel free to contact me on x if you have any questions, and hopefully I will see you in our members area, where I provide more of Elliott Wave analysis.
Good luck, trade well, and all the best in 2026.
Grega
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