DXY - Elliott Wave Breakdown ✅

Following on from our last post on DXY, we have moved up a considerable amount. In our last post we identified the higher timeframe impulsive move and waited for a catalyst, NFP, to move the market in our direction. See our previous post below:


In Elliott Wave Theory, the impulsive wave can be broken down into the following 5 waves:
Wave 1 - is made up of 5 subwaves (impulse)
Wave 2 - Is a corrective wave made up of 3 waves (ABC correction)
Wave 3 - is another impulse wave made up of 5 subwaves (impulse)
Wave 4 - is a corrective wave made up of 3 waves (ABC correction)
Wave 5 - Can be either an impulse or a correction - But its made up of 5 waves.

In this scenario, the 5th wave is appearing to be an impulsive move. We have a channel which we will be using as a guide to help us identify when the 5th wave will finish.

The way to use DXY is by doing the following: Bullish DXY = USD Strength. Bearish DXY = USD weakness
1. Analyse DXY for reversal zones and identify what the next move is
2. In our last post, we identified a reversal zone and we were waiting for NFP to be the catalyst to get the market moving (FEB 4th)
3. When DXY approaches the reversal zone, we go on to USD pairs and analyse them
4. Find a pair where you think USD will bounce/reject (depending on whether you're trading USD/XXX or XXX/USD)
e.g. in the VIP, we correlated DXY with EURUSD. We identified that we were bullish DXY = Bearish EURUSD. We had a trade setup ready and we were waiting for confirmation.
See below for the the VIP setup we had. Went into 10pip drawdown and hit TP of over 500pips = 1:50 RR.

Hope this post helped a little!

Goodluck and as always, trade safe!