Fundamentally, within the context of the current currency crisis experienced by emerging market economies, the dollar index is set to go to new highs in the upcoming weeks. Capital flights from weaker economies will pump into the dollar. This should have a strong effect on the valuation of the most important currency in the world. Turkey, Iran, Venezuela, Russia, Argentina and Brasil are perfect examples of the weakening of these market economies. For more information about these, please refer to: https://www.youtube.com/watch?v=-iUsKDfP5Kg.
Technically, the DXY is set to achieve new highs around 101.84 points. This is a FIB level of 0.618 phi in the overall chart.
We can see in this 4H timeframe chart a:
1. Descending Channel (red) after entering the 0.5 phi level between the 0 - 1 FIB level. 2. Consolidation/accumulation within the reversal triangle (blue) that pumped upwards. 3. An Inversed Head & Shoulders pattern that should pump upwards as soon as the DXY manages to break through the base of the pattern.
Now, taking a look at the 1D timeframe chart, we can see the following technicals:
1. A massive Bullish Bat Harmonic Pattern. 2. A massive Megaphone Pattern. 3. A Falling Wedge pattern with the confirmed breakout. 3. A bear trap formed after the rejection of the 0.382 phi and the failed dumped of the megaphone pattern.
This technical structure in the 1D timeframe fits and confirms the upcoming rise prediction of the 4H timeframe chart.
Finally, looking at the 1W timeframe, we can see that the Triangle Reversal Accumulation Pattern the dollar had for about ten years, between 2004 until 2014, fundamentally coincides with the time the emerging markets got into US debt by accessing cheap credit fostered by the IMF among other international entities and institutions.
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The Head & Shoulders pattern was not strong enough to pierce through the FIB level. Nevertheless, there is a Harmonic Pattern currently forming. We might be at the end of the consolidation phase. If this Harmonic Pattern is powerful enough to send the index higher, we could see it penetrating into the next level without much trouble and the dollar reaching new highs worldwide.
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Harmonic Pattern worked. DXY pumped to recover from last weeks dump.
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DXY just pierced the FIB line. It will dump now, consolidate and then pump once more to new highs.