The DXY is in intermediate decline, the previous intermediate cycle was very short so much that it caught the markets off guard. The current is in week 23, looking into history of intermediate cycles, there are few where a cycle was between 20 to 28 weeks. Things to consider in this cycle:
1. Price lost the 0.618 fib retracement & recovered it.
2. A short bounce is expected to find tough resistance a confluence of resistance where the 200DMA, 0.5 fib retracement & intersection of pink downward slopping line and blue resistance. A convergence of 4 is very tough to break but if it does then that would show counter trend strength.
So we can watch how price will interact with these levels. By the 19/20th of December we can expect resumption of downtrend into month end. A brief bounce before further downside. If the DXY goes below 99.578 that would be a hint when it begins a rally, it will crush many assets. If recession is to be acknowledged, it will be after Christmas especially by the USA Federal Reserve or reporting agencies.
Elsewhere, the daily RSI has positive divergence building up though the weekly view can tolerate some more downside. The talk of risk assets ripping higher is something to take with a shovel of salt especially for those on the sidelines, best not to chase this one. If a recession is nearby there will be better entries on the long side.
We will watch how this plays out level by level.
1. Price lost the 0.618 fib retracement & recovered it.
2. A short bounce is expected to find tough resistance a confluence of resistance where the 200DMA, 0.5 fib retracement & intersection of pink downward slopping line and blue resistance. A convergence of 4 is very tough to break but if it does then that would show counter trend strength.
So we can watch how price will interact with these levels. By the 19/20th of December we can expect resumption of downtrend into month end. A brief bounce before further downside. If the DXY goes below 99.578 that would be a hint when it begins a rally, it will crush many assets. If recession is to be acknowledged, it will be after Christmas especially by the USA Federal Reserve or reporting agencies.
Elsewhere, the daily RSI has positive divergence building up though the weekly view can tolerate some more downside. The talk of risk assets ripping higher is something to take with a shovel of salt especially for those on the sidelines, best not to chase this one. If a recession is nearby there will be better entries on the long side.
We will watch how this plays out level by level.