The DXY has been stalling since 24 Nov. and the weekly chart reveals an important resistance. Let’s take a look if the USD is about to break out - or crash.
Stochastic:
The Stoch is in overbought territory for the past 161 days. This is the longest period since 2015, and a dip into oversold is due.
Pitchfork:
The pitchfork and its internal Fibs appear well-respected by price. The outer boundary now provides resistance. DXY is stalling precisely at this point and formed a triangle.
Elliott:
Price is in the 50-62% retracement zone but has not hit the 61.8 Fib mark. The EW count is difficult. We are able to ‘force’ a completed ABC count with 5 sub-waves in wave C. Alternatively, we can count a completed wave 3 and expect a lengthy wave 4-correction towards 94 (the 38.2% retracement).
How I trade it:
Even though the ascending triangle is a bullish formation, a few factors point at a strong resistance. The idea is to build short exposure after a break below 96, in case the bearish assumption is correct, and to exit the position if DXY continues to range outside of the pitchfork.
Stochastic:
The Stoch is in overbought territory for the past 161 days. This is the longest period since 2015, and a dip into oversold is due.
Pitchfork:
The pitchfork and its internal Fibs appear well-respected by price. The outer boundary now provides resistance. DXY is stalling precisely at this point and formed a triangle.
Elliott:
Price is in the 50-62% retracement zone but has not hit the 61.8 Fib mark. The EW count is difficult. We are able to ‘force’ a completed ABC count with 5 sub-waves in wave C. Alternatively, we can count a completed wave 3 and expect a lengthy wave 4-correction towards 94 (the 38.2% retracement).
How I trade it:
Even though the ascending triangle is a bullish formation, a few factors point at a strong resistance. The idea is to build short exposure after a break below 96, in case the bearish assumption is correct, and to exit the position if DXY continues to range outside of the pitchfork.