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DXY Analysis



Note: the following analysis is formulated as an assimilation of Fibonacci, DeMark, Elliott Wave and other technical indicators. It is offered as education and not intended as advice in any way.

Regarding the DXY (trade weighted dollar index), just want to note briefly that we have some important Fibonacci projections (based on weekly, daily, hourly, and 13 minute charts) in the 82.50-82.75 area (with more specific targets around the 82.66 area).

If our count is right, this should be the culmination of the entire downtrend from 2001 (yes, 2001). If correct, much of 2005 should be spent in an upward bear market correction that could take the DXY all the way to 98 and possibly to 102.

You already know that sentiment is supremely bearish (all-time record in fact) so the sentiment backdrop is there for a potential turn. As well, weekly DeMarks have registered this week, daily DeMarks are set to do so as well this week.

Perhaps the most important part of the analysis took place last Friday when Greenspan embraced the bearish case as well. Like we said last week, generally you want to be on the other side of trades with Greenspan.

No market moves linearly; and this one has (down) since 2001. Now that everyone has embraced the trend, the potential is very high that a counter-trend move is nigh.

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