The DXY presented with a failed daily cycle by going below 22 June low, what followed was a sharp sell-off. We ended the week with a sign of reversal which is simply one to be viewed as a relief rally before going down further. The RSI being oversold might attract buyers but I expect the price action to mimic that between 15 November 2022 to January 2023 where it bobs up & down near the lower band.
We are in week 13, short weekly cycles are above 19 weeks so we have time for price to maintain downward trajectory before becoming alert for a strong reversal. While at it we must be cognisant of counter trends, the sharp drop in the DXY was due to inflation data, a counter trend can equally be fuelled by an opposite news especially around war & war of words between powerful nations. Conditions in EU/UK also put those nations in weak spots that can force traders into the dollar.
The Pitchfork gives us a guide, we lost the median line, we can backtest it out of the half cycle correction then head down with expectation the blue support might spur some short covering. When this chart is changed to a weekly we see the 200 week moving average nearby, a place for a strong bounce. Overall we must remain within the Pitchfork on the way down.
We are in week 13, short weekly cycles are above 19 weeks so we have time for price to maintain downward trajectory before becoming alert for a strong reversal. While at it we must be cognisant of counter trends, the sharp drop in the DXY was due to inflation data, a counter trend can equally be fuelled by an opposite news especially around war & war of words between powerful nations. Conditions in EU/UK also put those nations in weak spots that can force traders into the dollar.
The Pitchfork gives us a guide, we lost the median line, we can backtest it out of the half cycle correction then head down with expectation the blue support might spur some short covering. When this chart is changed to a weekly we see the 200 week moving average nearby, a place for a strong bounce. Overall we must remain within the Pitchfork on the way down.
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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.