USD - IS IT KEEPING THE UPPER HAND AFTER ALL?My today's analysis deals with the fact that it could coming to an end with the correcting, and a further rise in the DXY is in front of us.
> We traders know that no one can predict the future and that is exactly why you have to be prepared for all initial situations.
> If the DXY should rise again, it means "BLOOD" for the traditional and crypto markets.
> This creates dangers, but also opportunities - it is important to look at the big picture.
> Which levels are RELEVANT; I have explained in detail in the following pages.
TABLE OF CONTENTS
- 1. Part = DXY EXPLANATION
- 2. Part = TECHNICAL ANALYSIS
= Monthly - Time frame
= Weekly - Time frame
= Daily - Time frame
- 3. Part = CONCLUSION
FIRST PART
“INTRODUCTION“
The "DXY" indicator entered on September 28 of this year,
the first time since May 2021, in a downward correction.
> On this day, I published an analysis, which dealt with a possible top in the DXY.
> This forecast turned out to be a precision landing on the day and is to till now the TOP.
(My analysis is linked below this post, for confirmation purposes.)
To help you understand the relevance of the "DXY Index", let's take a closer look at it.
The U.S. Dollar Index (DXY) is a ratio (index) that compares the value of the U.S. dollar using a basket of six currencies.
> EUR = 57,6 %
> JPY = 13,6 %
> GBP = 11,9 %
> CAD = 9,1 %
> SEK = 4,2 %
> CHF = 3,6 %
EXPLANATION
DXY > RISE
One of the currency pairs falls > Pressure on other currency pairs increases = Chain reaction = All currency pairs fall
DXY < FALL
One of the currency pairs rise > Pressure on other currency pairs decreases = Chain reaction = All currency pairs rise
So if you interpret the DXY correctly, you can get confirmation for ideas in other related currency pairs.
SECOND PART
TECHNICAL ANALYSIS
For the analysis of the higher time levels I proceed according to the onion-skin principle.
> MONTHLY - Level > WEEKLY - Level > DAILY - Level
These are divided into
> SUMMARY > CHARTS
1. MONTHLY – TIME FRAME
SUMMARY
The trend channel shown in the chart formed in May|2011 and has since maintained its position as a legitimate trend channel. Especially its mid-trend line showed many reactions and great interest of the market.
> The price has reached this middle line and has already reacted positively.
> The trend arc is another bullish signal and could serve as additional resistance in the future.
If we look more closely at the "DEMAND" zone, we see that it has already been tested on.
> The monthly candle closed above the zone, which is another positive indicator.
> If we get another rise in the DXY, the marked "SUPPLY" zone, will serve as a very strong resistance and will be a real challenge.
The Fibonacci retracement should serve us as an additional confirmation, and was taken under proof in past movements (last decades).
> The 0.328 level, was breached without another reaction at this time level and the monthly candle closed below it.
> Still pending is the next 0.50 level, which in combination with several arguments, represents a Medium-Strong resistance.
> In the absence of a reaction from this level, we will see another sell-off to the 0.618 level.
Past highs usually serve as resistance, of which we have two.
> HIGH | 01/17 - Already showed a reaction
> HIGH | 03/20 - Reaction still pending
Points and levels of interest are available to us, which have a not irrelevant duration.
> The most significant resistance is the marked POI ZONE (turquoise), with 50 years of experience.
> We can be sure that there is great interest in this one.
> This already proved true with a first reaction, but we must continue to wait for the candle close to confirm the argument.
> If this is "temporarily" broken by a panic in the market, the POI at 102,000 points, serves as the next point of contact.
CHARTS
DXY – Overall picture
DXY – Trendlines
DXY – Supply & Demand ZONES + Market-Structure-Break
DXY – Fibonacci + POI
ATTENTION
In the following time levels, I will only deal with the NEW, added elements.
2. WEEKLY – TIMEFRAME
SUMMARY
Besides the already mentioned trend channel, another one is now visible (violet), which was formed in May|2021.
> Regardless of its inconspicuousness, it supports the tenor of the thesis.
> It was respected and must prove itself again in the coming days and weeks.
The additional "SUPPLY&DEMAND" zones join the two existing ones and remain untouched.
As further Fibonacci additions we have:
> A 1.618 level which was almost touched but is still pending to be worked off.
> A 0.786 level which has been able to defend the last two weekly closes.
> A 0.88 level, which in combination with the pending MSB, represents a strong resistance.
CHARTS
DXY – Overall picture
DXY – Overall picture + Monthly
DXY – Trendlines
DXY – Supply & Demand ZONES + Market-Structure-Break
DXY – Fibonacci + POI
ATTENTION
In the following time levels, I will only deal with the NEW, added elements.
2. DAILY – TIMEFRAME
SUMMARY
In the chart, further trend lines are drawn, which have shown reactions in the last 4 months.
> These will represent resistances for a possible upward movement.
Because so many elements are drawn in the chart, I would advise you to look again at the chart below, where you see only the S&D zones.
> Some close together with the higher time levels, which reinforces their - resistance/support.
CAUTION (Paler Zones)
> The Supply zone, has been touched before and thus has less resistance.
> The Demand zone, has been breached and thus should not trigger a major reaction, however it could still be "recaptured".
In order to be able to forecast possible target ranges, we would first have to reach the bottom, which has yet to form.
> The plotted levels can still change, but serve as a first reference point.
> If the reached level already represents the bottom, one can see that the FIB levels, beautifully go along with the "Supply&Demand" zones.
CHARTS
DXY – Overall picture
DXY – Overall picture + Monthly + Weekly
DXY – Trend lines
DXY – Supply & Demand ZONES
DXY – Fibonacci
THIRD PART
CONCLUSION
"The market makers only make money when everyone else loses. So what is the current mainstream opinion?"
Run that question through your head and let me know in the comments what you think is more likely.
> Another sell-off or a strong USD for now?
In summary, based on technical analysis, there are a few reasons for a "temporarily" strong USD.
> If you take a closer look at the area of the - HTF-POI-ZONE - you will see quite quickly that resistances could be enough for a whole arm.
> Bringing this wall down will take more than one run-up, in my opinion.
For this reason, I am assuming a strong USD and an accompanying bloodbath in the traditional and crypto markets.
> Positioning after confirmation of this thesis = SHORT
If this idea and explanation has added value to you, I would be very happy to receive a review of the idea.
Thank you and happy trading!
