ridethepig | DXY Long-Term Macro Map
Updated
The attentive readers have been asking can USD still devalue in this race to the bottom! The simple answer is that this is a good ploy in in such a restricted monetary environment although this move would be considered a bad one nowadays from a strictly fundamental perspective: the weakness of the dollar is necessary in order for equities to continue the advance. US were faced with a 'choose your side' between a weaker stock market or a softer currency; and opted for the weaker green.
đź“Ť On the positioning side...
The fate of the game now depends on the retrace leg in macro charts. If the dollar is driven off the cliff, then as G10 & EM FX are already committed to the short-circuit the flows will be very simple to track. This is a nice illustration of the Quarterly theme "aggressive dollar devaluation".
The move in question is transparent and therefore a good illustration of the theme and how to officially mark an outpost on the 'B' wave. So the correct play is to complete the ABC sequence before adopting a wait-and-see approach.
In order to get in as quickly as possible and at any price, we must begin to dig into the inner swings on lower time frames. Today we 'know' that the satisfactory requirements have been met at 102.5x, the plan from last year:
The longer term chart shows clearly the move(s) we are tracking and expecting.
"=> The move towards 102 is still corrective and within the bigger picture this is a large B wave of an ABC since the cycle highs in Jan 2017." âś…
"=> In theory we can expect another 5 wave decent to match the logic of the previous 5 wave move, ideally this will kick start the flow from 102-103 range highs." âś…
The manoeuvre from sellers becomes crystal clear, a devaluation cycle, they wish to seize the 75 and 50 targets in the multi-year correction before raising the stakes later in the decade once supply shortages enter into the picture. But the move cannot be said to have positive value on volatility, since expansions and contractions in vol have a case to play:
đź“Ť On the technical side...
Here I had been expecting the sell-off (at last!) from the 102.5x highs and had prepared a nice problem for my opponent, namely the EURUSD explosive move to the topside and now threatening the ultimate break of 1.15xx. It is relatively easy for someone who knows about the CB intervention on such a line and how it must be put under pressure. The 87.4x in Dollar is a minimum target for our 'C' leg that we are tracking, anything beyond this would imply that the impulsive leg towards 75 and 50 is underway.
In what follows from the comments, I will give me feelings and views to the next moves, so we can follow what is happening. Thanks for keeping the support coming with likes, comments, charts and etc!
đź“Ť On the positioning side...
The fate of the game now depends on the retrace leg in macro charts. If the dollar is driven off the cliff, then as G10 & EM FX are already committed to the short-circuit the flows will be very simple to track. This is a nice illustration of the Quarterly theme "aggressive dollar devaluation".
The move in question is transparent and therefore a good illustration of the theme and how to officially mark an outpost on the 'B' wave. So the correct play is to complete the ABC sequence before adopting a wait-and-see approach.
In order to get in as quickly as possible and at any price, we must begin to dig into the inner swings on lower time frames. Today we 'know' that the satisfactory requirements have been met at 102.5x, the plan from last year:
The longer term chart shows clearly the move(s) we are tracking and expecting.
"=> The move towards 102 is still corrective and within the bigger picture this is a large B wave of an ABC since the cycle highs in Jan 2017." âś…
"=> In theory we can expect another 5 wave decent to match the logic of the previous 5 wave move, ideally this will kick start the flow from 102-103 range highs." âś…
The manoeuvre from sellers becomes crystal clear, a devaluation cycle, they wish to seize the 75 and 50 targets in the multi-year correction before raising the stakes later in the decade once supply shortages enter into the picture. But the move cannot be said to have positive value on volatility, since expansions and contractions in vol have a case to play:
đź“Ť On the technical side...
Here I had been expecting the sell-off (at last!) from the 102.5x highs and had prepared a nice problem for my opponent, namely the EURUSD explosive move to the topside and now threatening the ultimate break of 1.15xx. It is relatively easy for someone who knows about the CB intervention on such a line and how it must be put under pressure. The 87.4x in Dollar is a minimum target for our 'C' leg that we are tracking, anything beyond this would imply that the impulsive leg towards 75 and 50 is underway.
In what follows from the comments, I will give me feelings and views to the next moves, so we can follow what is happening. Thanks for keeping the support coming with likes, comments, charts and etc!
Note
For those tracking the race to the bottom, JPY is the dirtiest shirt of all and looks cooked to beg further devaluation: 
Note
AUDUSD (Monthly) 
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