DXY - Reaching potential turning pointThe DXY has swung up from it's lows with a classic type 1 reaction and a dragon pattern at a key support that has held for the past two years. We have a bearish bias towards the DXY and here is why:
- Distribution pattern for over a year.
- Lower Highs and Lower Lows.
- General US Dollar Policy.
- Current bullish state of stock and crypto markets implying a weakening dollar.
So now in terms of the current chart and understanding where it could turn. For the past two years we have an impeccable record against the DXY, telling where it could and has bottomed or where it could and has topped.
Now, traditional technical analysis suggests a less convincing but still valuable bearish outlook on it. Here it is:
- Minor resistance just above.
- Completing the bearish 5-0 of this harmonic (We know XB is short of the required 0.786, we're choosing to value it the same).
- Straight reaction to T1 from the harmonic, no sign of accumulation bottom or deep retracement to capture value. Usually signifies an impulse move before at least a retracement to backtest the pcz and put in a higher/ same low.
- Strong Bearish Divergence on all the oscillators.
With these factors we are looking for the DXY to turn soon, the bearish 5-0 target would be a great point to do so but it could yet push higher.
The overall purpose of this post is to showcase that the DXY is still bearish although recent strength. The market is still bullish and could become even more so in the coming weeks/months.
