DXY macro analysis
Our Comprehensive Analysis of DXY and the Anticipated Developments in the Coming Weeks to Months
The U.S. Dollar Index (DXY) has recently exhibited a notable breakout beyond its weekly resistance trendline, a move that has raised questions about its sustainability. In our assessment, this breakout could potentially be a false one, and its fate hinges on the strength of the impending pullback.
Key Observations:
1. **Crucial Resistance at 105.847**: Presently, a formidable resistance level at 105.847, representing the current year's high, stands as our target. We anticipate a potential rejection at this juncture. Moreover, a more robust resistance barrier looms at 107, aligning with the monthly Fibonacci retracement level of .50. We deem the likelihood of breaking this level as relatively low. A failure to overcome the current year's high at 105.847 could establish a macro double top pattern, suggesting a bearish trajectory.
2. **Channel Formation Since May 2021**: An observable channel, dating back to May 2021, has seen a vigorous bounce from its lower boundary. Presently, we find ourselves approaching the upper channel boundary, reinforcing the significance of the resistance levels already mentioned.
3. **Green Candlestick Streak**: The DXY has recorded a sequence of eight consecutive green candles, which typically signals an impending reversal. The extent of the impending reversal correlates with the number of green candles in the sequence. Notably, at the current year's high of 105.847, three red arrows are marked, with two already confirmed and the third awaiting confirmation as a level of rejection. Additionally, a third touch of a level often augments the likelihood of rejection.
4. **RSI Indicators**: The Relative Strength Index (RSI) reveals compelling insights. It is presently trading below a trendline that originated in May 2022, marking the third potential rejection at this level. Moreover, the RSI at the 62 level appears to serve as a significant resistance point. A switch to the daily chart highlights a bearish divergence forming on the RSI.
5. **EURUSD Relationship**: It's imperative to note the inverse relationship between the DXY and EURUSD. As the DXY has ascended, the EURUSD has trended downward. Currently, EURUSD is positioned just above the weekly Moving Average 50 (MA 50), slightly above the weekly Fibonacci retracement levels of .618 and .50. A minor bullish RSI divergence on the daily EURUSD chart hints at a possible reversal. Should this materialize, we anticipate the DXY following suit, alleviating pressure on other asset classes.
Future Projections:
Following an anticipated reversal, our targets in the coming weeks and months encompass testing the purple trendline originating in 2008, within the range of 91 to 95 levels. Ultimately, we expect this long-standing trend to be breached over the ensuing months or years, leading to a decline to 87 and potentially lower levels. Such developments could signal significant bullish trends in both the stock and cryptocurrency markets.
Please note that financial market analyses are subject to change, and it's crucial to adapt your strategy based on evolving market conditions and new information.
The U.S. Dollar Index (DXY) has recently exhibited a notable breakout beyond its weekly resistance trendline, a move that has raised questions about its sustainability. In our assessment, this breakout could potentially be a false one, and its fate hinges on the strength of the impending pullback.
Key Observations:
1. **Crucial Resistance at 105.847**: Presently, a formidable resistance level at 105.847, representing the current year's high, stands as our target. We anticipate a potential rejection at this juncture. Moreover, a more robust resistance barrier looms at 107, aligning with the monthly Fibonacci retracement level of .50. We deem the likelihood of breaking this level as relatively low. A failure to overcome the current year's high at 105.847 could establish a macro double top pattern, suggesting a bearish trajectory.
2. **Channel Formation Since May 2021**: An observable channel, dating back to May 2021, has seen a vigorous bounce from its lower boundary. Presently, we find ourselves approaching the upper channel boundary, reinforcing the significance of the resistance levels already mentioned.
3. **Green Candlestick Streak**: The DXY has recorded a sequence of eight consecutive green candles, which typically signals an impending reversal. The extent of the impending reversal correlates with the number of green candles in the sequence. Notably, at the current year's high of 105.847, three red arrows are marked, with two already confirmed and the third awaiting confirmation as a level of rejection. Additionally, a third touch of a level often augments the likelihood of rejection.
4. **RSI Indicators**: The Relative Strength Index (RSI) reveals compelling insights. It is presently trading below a trendline that originated in May 2022, marking the third potential rejection at this level. Moreover, the RSI at the 62 level appears to serve as a significant resistance point. A switch to the daily chart highlights a bearish divergence forming on the RSI.
5. **EURUSD Relationship**: It's imperative to note the inverse relationship between the DXY and EURUSD. As the DXY has ascended, the EURUSD has trended downward. Currently, EURUSD is positioned just above the weekly Moving Average 50 (MA 50), slightly above the weekly Fibonacci retracement levels of .618 and .50. A minor bullish RSI divergence on the daily EURUSD chart hints at a possible reversal. Should this materialize, we anticipate the DXY following suit, alleviating pressure on other asset classes.
Future Projections:
Following an anticipated reversal, our targets in the coming weeks and months encompass testing the purple trendline originating in 2008, within the range of 91 to 95 levels. Ultimately, we expect this long-standing trend to be breached over the ensuing months or years, leading to a decline to 87 and potentially lower levels. Such developments could signal significant bullish trends in both the stock and cryptocurrency markets.
Please note that financial market analyses are subject to change, and it's crucial to adapt your strategy based on evolving market conditions and new information.
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