Another 48h - DXY Rally Has Arrived Today

2024/10/31
Another 48h - DXY Rally Has Arrived Today
“time & price indicators are running out of steam!
will the us labor market be robust tomorrow?”


The US economy finally appears to be emerging from self-organized green US stagflation, according to the latest numbers released so far this week. And what is the US stock market doing? The US dollar? Both stop! And the yield curve is becoming more expensive! A great example of a classic price action counter-reaction, as it is fundamentally taught! Or? Be that as it may - in any case, we now have the 4th red trading day in the DXY this week (of 4 trading days) - albeit in the low % range. Not much, admittedly. But I don't want to hide it at this point.

• Will We Handle (104.477 points) A Bullish Breakout?
  
• Does The 2017 High (103.820 points) Serve As Support?
  
• Does The 2017 High (103.820 points) Serve As Resistance?
  
• Will DXY Fall Back (103.104 points) based on the US economic data?
  

These 4 questions need to be answered - during this calendar week.
So that we can learn something new with the help of price action; so that we remember that we already knew something old and now know it confirmed. Because a breakout price action above 104.477 points should confirm the medium-term trend reversal formation, i.e. w formation. While a fall below 103.104 points could possibly make the bear's mouth water again due to disappointing and/or negative US economic data. This is the educational learning stuff for this calendar week!

104.447 points - (2024/08/01) - High W-Formation
103.890 points - (2024/10/30) - last price action
103.820 points - (2017/01/03) - Historical Mid Term High
103.104 points - (2024/10/10) - High While Last Inflation Data
These are the most important price actions for this calendar week!
This week we had two red dojis at the start of the week and/or yesterday on wednesday and today on thursday two times first relativ big red candlestick trading days in the DXY . And that more or less round about the highs of even our w trend reversal formation - a little bit above the historical mid term high. Traders and/or investors seem to be wondering whether the fundamental US economic data is strong enough to trade and/or invest the DXY above our w trend reversal formation from now on. The bulls also tried to drive the DXY higher today, but it didn't work today either - less as yesterday and/or in the first two days (this week).

“The hardest thing is to judge what level of risk is safe.”
George Soros

Tech stocks are falling after yesterday's numbers from MSFT and META , but GC1! and BTC1! are also falling - what's going on? The impending US election is likely to be the trigger for the price action sell-off! I've already discussed this briefly - of course the US election on Tuesday next week plays a crucial role! But which ones? I don't know that! But another rampant debt from Harris? Let alone restrictive tariffs from Trump? That reminds me of the sharp rise in UK yields - when the British government wanted to massively increase its borrowing and at the same time sharply increased some taxes. What was the beginning of the end by Liz Truss 2022. Today also, US yields are exceptionally high - in relation to the current interest rate and/or expectations of upcoming interest rate cuts. And react, if you will, with a vote of no confidence, with sharply increasing returns - and that is very reminiscent of the Liz Truss moment that drove the then British Prime Minister out of office. I'm not a yield curve expert - but this fear certainly cannot be denied in the price action of the US yield curve shortly before the US election! Or am I reading too much into it? Because as already indicated at the beginning - the US economy has been growing more or less higher than inflation more or less since the last 3rd quarter. What should normally boost the DXY and Wall Street DJIA & SP500 & NDX . But the opposite was the case today! Today it was risk-off - and because GC1! (new all-time high just before today) and GC1! were heavily overbought in the short term in anticipation of a Trump victory, it seems like that some investors and/or traders pulled the ripcord, especially before the US election. However, AAPL and AMZN just delivered numbers, but I didn't have time to read them, let alone analyze and evaluate them. But it seems to be really difficult for stocks at the moment - especially for tech stocks.

For this week, I have also included 2 technical indicators, also due to the numerous US economic data. In order to be able to measure the responsive price action on both the price axis (using the roc) and the time axis (using the aroon). Since 1st October, both the ROC and the Aroon indicator have shown a bullish indication on a short-term period (120 hours - one calendar week). But today it was dissolved again for the first time. And that just one day before the US Unemployment Rate report. So we're waiting for tomorrow's numbers. Which should then dictate the direction of the DXY . The majority expects an unemployment rate of 4.2%. The current US unemployment rate is 4.1%. If the US unemployment rate stays at 4.1% or even get lower, the rally that just arrived today should likely go up again, if I'm not mistaken. Therefore, pay attention to the US labour market data tomorrow - and much more on the reaction of the market, the majority of traders and investors on the DXY .


With best wishes
and with good intentions!
Aaron



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