Not much of an analysis, more of a post to debate and food for thought.
As you see the current price action on the 1W time-frame since January appears to be forming a bottom similar to that of January - March 2018.
The similarities are that both Bottoms came after a 1D Death Cross (MA50 (blue trend-line) crossing below the MA200 (orange trend-line)). The 1W MACD Bullish (green arrows) and Bearish (red arrows) Crosses are also on an identical sequence.
On the flip-side however, the current red 1W candle is proportionally much lower than any that followed the 2018 Bottom. As a result that causes the RSI to break its (minor) Higher Lows line.
Fundamentally 2018 didn't have multi trillion USD packages inserted into the economy to save it from the COVID pandemic, as those we're having post March. So will the upcoming new stimulus vote alter these multi-year symmetrical patterns, or history will repeat itself?
Recent short-term DXY signal:
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I believe that the thing that is different this time is that the FED won't attempt to support the Dollar this time.
In 2018 the Fed did strengthen the dollar and that then gave China, Japan, Germany and exporting countries a free lunch to carry on exporting to US with a low currency rate compared again US dollar.
In 2018-Q3 foreign central banks also reduced their buying of US debt and so I think the FED now feels that it has no incentive to strengthen the dollar. In other words if you guys don't buy our debt we wont buy your crap,
TradingShot
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@harveybains146, I agree. They've let it free-fall since March, even though a few months earlier Powell was claiming that a strong dollar was his intention. Now it is all about supporting the system from coming down by maintaining high liquidity in the market. One word: inflation.
ntwan
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@TradingShot, If Powell says the FED is committed to low rates it's probably because they are about to raise rates. These people are not our friends. They are just waiting until we are out of lockdowns and will claim the economy is surprisingly vibrant even though everybody will be unemployed.
tradingpro
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I strongly believe this 88-90 is the bottom for dollar with all stimulus priced in to these numbers. If king $ slides any further then deep Recession is waiting for US.
TradingShot
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@tradingpro, Not necessarily. Remember that a cheap dollar is good for exports.
B-17
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@TradingShot, my money is on a weak dollar long term. GL
Guessed
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"Dollars for sale!", said the Fed to the rest of the countries whose fiscal idiocy is even more Keynesian than America's. The only reason dollars can be manufactured in finite quantity is that they are still more valuable than currencies manufactured even faster. It's a race to the bottom, and then we can reset with gold and silver, and say RIP to traditional fiat currencies and arbitrary ones like bitcoin anchored to less than the dirt it takes to grow another tulip.
B-17
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I do think the technical setup is bullish DXY, but when I consider the expansion in M2 that is likely to continue given the deficit spending that is likely to come, I would think the technicals point to a relief rally more than the start of a new uptrend.
The Fed has stated it is attempting to foster inflation. They will succeed. Don't fight the Fed.
In 2018 the Fed did strengthen the dollar and that then gave China, Japan, Germany and exporting countries a free lunch to carry on exporting to US with a low currency rate compared again US dollar.
In 2018-Q3 foreign central banks also reduced their buying of US debt and so I think the FED now feels that it has no incentive to strengthen the dollar. In other words if you guys don't buy our debt we wont buy your crap,