Another 48h - DXY (Daily) At Crossroad, In A Historical Context

2024/10/27
Another 48h - DXY (Daily) At Crossroad, In A Historical Context
“bullish for 20 days! is the bearish exhale coming now?”


After strong capital inflows towards the weekend, GC1! was finally a little weaker again - compared to the DXY and/or the NDX and SP500 . While the DJIA also fell a bit. On Friday, chip values ​​in particular rose significantly - the NDX therefore reached a new all-time high intraday. Anyway, today I would like to discuss the price action without the w trend reversal formation - on a daily basis, using candlestick charts. I would like to bring the big picture to the fore, almost mentioning historical context. Because the DXY is on two crucial price action marks this weekend again - like last one.

104.317 points - (2024/10/25) - last price action
103.820 points - (2017/01/03) - Historical Mid Term High
103.805 points - (2024/10/25) - SMA #3 hl2 200

In early 2022, the DXY shot up as the war began in eastern Ukraine. Since then, the US dollar has proven itself to be a liquid haven also due to the FED's consistent restrictive monetary policy - where everyone, including you and me (as simple private individuals who want to quickly earn legal money on the financial market). Which in turn was just a logical reaction function, if you will, due to the US government's fiscal policy. First the Corona virus outbreak and then the costs of war in Eastern Ukraine. Because FED boss Jay and his decision-makers were in our so-called West the fastest and highest when it came to raising interest rates from 2022. So many people invested their money in the liquid haven of the US dollar - whether with a fixed interest rate, in Chicago (thanks to a higher and more expensive yield curve) and/or even with a risk premium, in New York (in the stock market).

70.698 points - (May 2008) - Historical Long Term Low
88.942 points - (May 2018) - Historical Low After Mid Term High
92.630 points - (December 2005) - Last High Before Historical Long Term Low
99.578 points - (November 2023) - New 2nd Higher Low After Historical Long Term Low
103.820 points - (March 2017) - Historical Mid Term High
104.317 points - (2024/10/25) - last price action
114.778 points - (November 2022) - New 2nd Higher High After Historical Long Term Low

What is interesting in this historical geopolitical context, at least in my humble opinion, is the fact that the last high in the DXY was in September 2022, at 114.778 - and still is today! Why? Because it's the high and low in the week of September 2001, during the terrorist attacks on the Twin Towers, the World Trade Center, which was traded at 115.100 and/or 112.200 at that time back then. And that before the historic sell-off of the US dollar began in the following spring of 2002 - down to 70.698 (in May 2008).

“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”
George Soros

• Does The 200 SMA (103.805 points) Serve As Support?
  
• Does The 200 SMA (103.805 points) Serve As Resistance?
  
• Does The 2017 High (103.820 points) Serve As Support?
  
• Does The 2017 High (103.820 points) Serve As Resistance?
  

These 4 questions need to be answered! Not in the next 48 hours? Maybe later - this and/or next week (next 5 and/or 10 trading days). However, if we ask ourselves that way, we can learn something new with the help of price action; or we remember that we already knew something old and now know it is confirmed. Be that as it may; If we ask ourselves these 4 questions every day in the current calendar week and/or over next calendar week while the price action is running, we will definitely (not) learn something new.

On July 11, 2024, the DXY fell below the 200 SMA trend line for the first time. The bulls managed to reach 104.799 points on July 30, 2024, but were not able to trade above it again, let alone invest. Which is why the temporarily successful outbreak on Monday, at the beginning of last week, is more than worth mentioning. Because this is fundamentally, from the technical point of view, a bullish long-term signal. However, this needs to be confirmed for the first time in the coming days, including next week! How? By continuing to trade and invest above the 200 SMA!


With best wishes
and with good intentions!
Aaron



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