As the old time traders kept saying, "get the dollar right and everything else falls in its place", still especially during these times, the dollar index is the barometer of everything around us.
So, is this at least a short term top?
Looks like it with this week's closing and assuming for now that end of month will print an inside candle. If not, look higher but we have the midterms in the next two weeks, so a new wave of turbulence is to be expected. An inside month candle is the perfect candidate to offer the volatility it's needed for this big event as liquidity will dry.
As you can see in the monthly time frame we reached supply zones created so many years ago that the majority of young traders haven't even born yet, clearing the area around the fib extension from March '20 highs to January '21 lows. That is the last big swing, an inverted cycle in essence, that broke the back of every currency and nearly every developing economy of the planet, while starting to threaten G7's like the UK, the EU and Japan, which will fall in that order in due time under the pressure of their debts.
Along with a.m. supply zones, we have the resistance of the upper trending channel line (light blue), having broken first the long term, nearly 16 years long, channel (grey lines) by clearing convincingly the 104 area. Maximum target of the triangle is calling for 117.30, while the double top area of 2001 is acting as a magnet for this leg up towards the old highs.
Looking at the weekly chart above we can see that we have two failed break outs from the mother bar (orange rectangle) and an outside reversal closing that created a fresh supply zone that day traders will use to sell the dollar. Bearish divergence in momentum as well. Nothing of course is certain yet, until we break down the last major swing low of the uptrend at 110.05, which also as a round figure will have it's own battle around it. Don't forget is a hammer candle. Possibilities though are increasing if we see a violation of this area, that at least a near term corrective phase will begin, which will give some breathing space to stocks, commodities and the rest of the world currencies. Only to short them again higher with a better R/R, until the 1st or 2nd quarter of next year that there is great possibility for stocks starting to run.
cheers,
P.
So, is this at least a short term top?
Looks like it with this week's closing and assuming for now that end of month will print an inside candle. If not, look higher but we have the midterms in the next two weeks, so a new wave of turbulence is to be expected. An inside month candle is the perfect candidate to offer the volatility it's needed for this big event as liquidity will dry.
As you can see in the monthly time frame we reached supply zones created so many years ago that the majority of young traders haven't even born yet, clearing the area around the fib extension from March '20 highs to January '21 lows. That is the last big swing, an inverted cycle in essence, that broke the back of every currency and nearly every developing economy of the planet, while starting to threaten G7's like the UK, the EU and Japan, which will fall in that order in due time under the pressure of their debts.
Along with a.m. supply zones, we have the resistance of the upper trending channel line (light blue), having broken first the long term, nearly 16 years long, channel (grey lines) by clearing convincingly the 104 area. Maximum target of the triangle is calling for 117.30, while the double top area of 2001 is acting as a magnet for this leg up towards the old highs.
Looking at the weekly chart above we can see that we have two failed break outs from the mother bar (orange rectangle) and an outside reversal closing that created a fresh supply zone that day traders will use to sell the dollar. Bearish divergence in momentum as well. Nothing of course is certain yet, until we break down the last major swing low of the uptrend at 110.05, which also as a round figure will have it's own battle around it. Don't forget is a hammer candle. Possibilities though are increasing if we see a violation of this area, that at least a near term corrective phase will begin, which will give some breathing space to stocks, commodities and the rest of the world currencies. Only to short them again higher with a better R/R, until the 1st or 2nd quarter of next year that there is great possibility for stocks starting to run.
cheers,
P.
