The U.S. Dollar index (DXY) has been trading within a Channel Up since the March 2008 bottom during the U.S. Housing Crisis. This is not the first time we use this pattern to identify key macro trend shifts, in fact we revisited it 2 months ago, calling for 'a final pull-back before a massive rally'.
Well the time for this rally is here as yesterday it completed a -13.35% decline from the January 2025 High a year ago.
That decline was technically the Bearish Leg of this pattern's correction phase (red Channel). This is part of its incredible symmetry, with similar correction phases throughout this time period followed by bullish phases, that eventually lead to price rallies to the 1.618 Fibonacci extension.
All conditions for the new Bull Cycle (Bullish Leg) have been fulfilled. Along with the price being at the bottom of the Channel Up, with the -13.35% decline being a benchmark correction historically, we are also past a 1W Death Cross, which has always been a bottom signal on this multi-year Channel Up.
This has always happened at the end of the Bear Cycles (red correction phase) with the Arc pattern making a multi-week Double Bottom before the decisive rebound the breaks above the 1W MA50 (blue trend-line). That break-out is the confirmation of the Bull Cycle start (Bullish Leg).
With the 1M RSI having already touched its 16-year Support Zone, which has provided the most optimal Buy Signals throughout this pattern, we expect the Dollar Index to start rising aggressively in the long-term, targeting the 120.000 - 128.000 Zone on its way to the 1.618 Fib ext, which has been where the previous Higher Highs (Cycle Tops) were priced. 125.000 is a fair Target within a 2-year time-frame.
Notice also that a solid peak indicator (Sell signal) is when the 1M RSI hits 80.00, indicating that the market is massively overbought (overheated trend).
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Well the time for this rally is here as yesterday it completed a -13.35% decline from the January 2025 High a year ago.
That decline was technically the Bearish Leg of this pattern's correction phase (red Channel). This is part of its incredible symmetry, with similar correction phases throughout this time period followed by bullish phases, that eventually lead to price rallies to the 1.618 Fibonacci extension.
All conditions for the new Bull Cycle (Bullish Leg) have been fulfilled. Along with the price being at the bottom of the Channel Up, with the -13.35% decline being a benchmark correction historically, we are also past a 1W Death Cross, which has always been a bottom signal on this multi-year Channel Up.
This has always happened at the end of the Bear Cycles (red correction phase) with the Arc pattern making a multi-week Double Bottom before the decisive rebound the breaks above the 1W MA50 (blue trend-line). That break-out is the confirmation of the Bull Cycle start (Bullish Leg).
With the 1M RSI having already touched its 16-year Support Zone, which has provided the most optimal Buy Signals throughout this pattern, we expect the Dollar Index to start rising aggressively in the long-term, targeting the 120.000 - 128.000 Zone on its way to the 1.618 Fib ext, which has been where the previous Higher Highs (Cycle Tops) were priced. 125.000 is a fair Target within a 2-year time-frame.
Notice also that a solid peak indicator (Sell signal) is when the 1M RSI hits 80.00, indicating that the market is massively overbought (overheated trend).
---
** Please LIKE 👍, FOLLOW ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! This is best way to keep it relevant, support us, keep the content here free and allow the idea to reach as many people as possible. **
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.