Is DXY Signalling a Recession Coming Alive

The DXY has had a very short weekly cycle, on the daily timeframe price has carved a rising wedge which we expect to resolve to the downside. Not far down is the 200 day moving average that can provide good support for the uptrend. The 50 day moving average is also turning upwards with higher probability that we will see a golden cross. That would mean a lot of pressure for the stock markets. Since the DXY is seeking a 3 year low, the second daily cycle is usually powerful likely to see price challenge the blue declining resistance which is part of a giant falling wedge. We could be entering a difficult time perhaps the recessionary environment is about to play out more on the markets. The green line is likely to form the resistance that guides the DXY into a daily cycle low, once we close above that on daily chart we can be confident we are beginning a powerful move to the upside (there is a low probability we attempt higher again, in that case the green resistance will shift a bit.

Commentaire:

The DXY had a shallow daily cycle, it is now within time for a half cycle high in daily cycle 2, we can expect price to briefly consolidated below the blue resistance before taking it out into a cycle high.

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