Possible ending diagonal on Dxy - Short
Technical
Since the beginning of 2021 Dxy has been running flat in a range between a low of 89.2 and a high of 93.4. As indicated on the chart the latest long move seems to have formed an ending diagonal backed up by divergence on the MACD. Structures like this will often result in a minimum 50% retracement of the initial move. Like all technical analysis you should be aware of the underlying fundamentals as well.
Fundamental
Dxy reached current levels due to the Feds liquidly policy (QE if you like) and the very low interest rate and added to that we have the new governments planned spending which should further undermine the dollar. Having said that the Fed have a 2% inflation target which is being battered recently so the market expect tapering of bond buying and eventual interest rate hikes. The juxtaposition of these factors is currently causing the Dollar to range.
Given that price is currently nearer the top end of its range and has possibly formed an ending diagonal it would suggest that short move is likely.
Remember we are dealing with probability when forecasting therefore you should always trade is such a way that does not hurt your account when any individual trade doesn't work out.
This is not investment advice.
Steve Nixon
Since the beginning of 2021 Dxy has been running flat in a range between a low of 89.2 and a high of 93.4. As indicated on the chart the latest long move seems to have formed an ending diagonal backed up by divergence on the MACD. Structures like this will often result in a minimum 50% retracement of the initial move. Like all technical analysis you should be aware of the underlying fundamentals as well.
Fundamental
Dxy reached current levels due to the Feds liquidly policy (QE if you like) and the very low interest rate and added to that we have the new governments planned spending which should further undermine the dollar. Having said that the Fed have a 2% inflation target which is being battered recently so the market expect tapering of bond buying and eventual interest rate hikes. The juxtaposition of these factors is currently causing the Dollar to range.
Given that price is currently nearer the top end of its range and has possibly formed an ending diagonal it would suggest that short move is likely.
Remember we are dealing with probability when forecasting therefore you should always trade is such a way that does not hurt your account when any individual trade doesn't work out.
This is not investment advice.
Steve Nixon
Commentaire:
Patience is virtue - finally this trade has started paying off. I see more downside to the 50% fib and possibly the bottom of the channel.
Commentaire:
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