DXY - Well Thats a Rally .. But Can it Hold This Range?
Well the $DXY went from dumping yesterday on the FOMC news to pumping today on .. well who knows what. News of a weak Euro possibly?
That said, there are still plenty of bearish divergences on momentum, and midst a range of HTF historical resistance for DXY. But if we break clear of this and continues the mad dash to the upside, it might spell some doom for equities, cryptos, others for the next few weeks, or more.
That said, there are still plenty of bearish divergences on momentum, and midst a range of HTF historical resistance for DXY. But if we break clear of this and continues the mad dash to the upside, it might spell some doom for equities, cryptos, others for the next few weeks, or more.
That said, today's Bitcoin dump also perfectly correlates with a strong move to the upside for the US Dollar Index (DXY). In fact, here is a chart.
My feelings: DXY's current pattern has all the makings of a cycle top parabola. Its also presenting insane volatility while it bounces around historical high timeframe resistance with bearish divergences aplenty. BUT remember that markets can remain irrational longer than we remain solvent.
I posted that earlier chart maybe 10 days ago, where I measured these DXY cycles of based on their overbought (momentum) conditions for DXY. That led us to identify that historically the average overbought condition for DXY lasts between 50 and 60 days. But there are also some outliers, under 20 days and over 200 days in a couple cases.
We are currently around 35 days into an overbought momentum. Compared to historical averages we are approximately 60% through the trend before it rejects.
Based on historical data ofc. And also assuming its not another 2015 style outlier with like 200 days of overbought conditions.
What does this mean for crypto or Bitcoin?
It means this bearish indecision could continue for a few weeks, up to a few more months (or longer). As long as the DXY has strength, crypto markets are likely to remain stagnant and unlikely to see a strong bull market resume. Bitcoin can rise against a strong DXY but it will need a meaningful catalyst to do so, possibly something like an American Spot ETF being approved or more government or corporate endorsements.
Now if DXY fails to close over this range of high timeframe resistance and properly reject, say back below the 100s or especially the 90s - the odds of a crypto bull market resuming greatly increase.