Stock and Crypto markets should be aware that, while DXY appears to be in a free fall lending fuel for the recoveries we've been seeing across markets, it could yet turn back up - thus greatly shortening the fuel for these recoveries.
Scenarios:
- Very Short Recovery across markets -- DXY turns up here somewhere between the middle of the weekly or monthly middle of the W pattern shown on the weekly chart above
- Short but Stronger Recovery across markets - DXY still turns up in the same area as above, but it spends a good bit of time hanging out here before moving up towards 118
- Extended Recovery across markets - DXY falls and stays below the red box and continues down
Scenarios:
- Very Short Recovery across markets -- DXY turns up here somewhere between the middle of the weekly or monthly middle of the W pattern shown on the weekly chart above
- Short but Stronger Recovery across markets - DXY still turns up in the same area as above, but it spends a good bit of time hanging out here before moving up towards 118
- Extended Recovery across markets - DXY falls and stays below the red box and continues down
Note
Update - weekly candle opened at top of the middle of the weekly W pattern. It then wicked below and bounced above. We are now testing resistance at 103:Recovery could be extended for 3-6 months or even a year depending on how long before DXY turns up, but it is possible it turns up much faster. Again, keep an eye on this one in relation to current market recoveries.
Note
So far we've bounced right off the top of resistance (to dropping back below 100s). 50/200 daily MA (also EMA, but not pictured) have death crossed. Recoveries could be cut short if we get back above 108 or so. I'd like to see it turn down sharply after testing the area around the 200 day MA for recoveries to continue (area of green box)Note
Update, bounced off of the green box as expected - now back down to the red box. Expecting we bounce again back towards green until it makes a decision on direction - markets may/may not see a dip if it does, but overall expecting continued market recoveries until a decision is made where it breaks through and holds above (market downturn) or below (market recoveries strengthen) either zone:Note
We are back at the bottom of the red box, and RSI is looking like it may setup to repeat itself a 3rd time, and a move back up towards the green box shown below, possibly a stronger move if RSI repeats itself:Not pictured, but in opposition to turning up here: there was a strong death cross on the 50/200 day MA, but I'd want to see RSI break its long-term trend for it to continue moving down instead of heading back up to the green box or even higher.
Note
Update, the head/shoulders has fully come into view. Fail and we'll head up towards 105 again. Get well above and hold above 105-108, recoveries are ending. Succeed and we could make a move back down towards old lows prior to the channel breakout, or even lower towards the top of the 3 monthly's falling wedge:Note
If there is a case for DXY moving down, UDN (the USD Bearish EDF) could reclaim the inside of its 2 weekly falling wedge and move back towards the top, even break out of the other side. Conversely, it could continue down towards its original 1x measured target from having broken down out of that wedge:Related publications
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.