Why I analyze the direction of DXY.

For a trader that trades GBPUSD like me, it is important to analyze the direction of DXY because DXY is negatively correlated with GBPUSD. Knowing the direction of DXY is an additional confluence in trading GBPUSD.

Here is how I analyze DXY direction.

Today's DXY direction analysis.

- DXY is showing a downtrend move.
- It took the sell side liquidity with equal low (SSL D TAKEN line) then moved up.
On its way up,
- it filled fair value gaps (purple shades). 1 fair value gap is not yet fully filled
- it took the 78.6% Fib level, which is the deepest optimal trade entry (OTE)

LONG bias: it is possible for DXY to continue moving up because there is a daily bearish order block just above (BearOB D line)

SHORT bias: it is also possible that DXY could reverse back down from here because it is showing signs of rejection of the 78.6% Fib level.

For this reasons, my bias for DXY is NEUTRAL.

Now it's time to analyze GBPUSD