The DXY - Will likely determine the fate of the broader market.
Hello Traders,
As many of you know, the DXY has a large part to play in whether the broader market rallies, or dumps. Just take a look at yesterday when the broader market dumped, the dollar had a massive rally.
- Knowing that there is this correlation, we can use the DXY to help us determine what the broader market might do.
- We want to find the likely scenario for DXY, and use that likely scenario to guide our decisions for other trades.
Right now, the DXY is forming a 4Hr Bull Flag. As the name implies this could potentially lead to a bullish move. If the DXY does trend Bullish, the broader market will likely trend bearish.
As a broad statement:
DXY Bullish = Risk Assets Bearish
DXY Bearish = Risk Assets Bullish
So if the broader market is going to have a shot at a rally, the DXY needs to rollover and trend bearish.
So then how do I know whether the DXY is going to be bullish or Bearish?!
- Simple, we have support and resistance levels that will guide us.
If support breaks, the DXY will rollover and most likely create a higher low.
- This rollover will give bulls in the broader market the confidence to rally the market.
If support holds and the DXY breaks higher, the bears in the broader market will likely take price lower.
Use this chart as a guide and keep an eye on these levels.
Thanks everyone and best of luck trading!
As many of you know, the DXY has a large part to play in whether the broader market rallies, or dumps. Just take a look at yesterday when the broader market dumped, the dollar had a massive rally.
- Knowing that there is this correlation, we can use the DXY to help us determine what the broader market might do.
- We want to find the likely scenario for DXY, and use that likely scenario to guide our decisions for other trades.
Right now, the DXY is forming a 4Hr Bull Flag. As the name implies this could potentially lead to a bullish move. If the DXY does trend Bullish, the broader market will likely trend bearish.
As a broad statement:
DXY Bullish = Risk Assets Bearish
DXY Bearish = Risk Assets Bullish
So if the broader market is going to have a shot at a rally, the DXY needs to rollover and trend bearish.
So then how do I know whether the DXY is going to be bullish or Bearish?!
- Simple, we have support and resistance levels that will guide us.
If support breaks, the DXY will rollover and most likely create a higher low.
- This rollover will give bulls in the broader market the confidence to rally the market.
If support holds and the DXY breaks higher, the bears in the broader market will likely take price lower.
Use this chart as a guide and keep an eye on these levels.
Thanks everyone and best of luck trading!