Applied Complexity Analysis: DXY
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.
Just wanted to update our U.S. Dollar analysis of a few months back. You will recall that we believe the USD is ripe for a cyclical rally within its secular downtrend, and that this cyclical rally could last through most of 2005 and take the dollar index (DXY on your Bloomy) to anywhere from 93 to 100 in a counter-trend bounce. Previously we had thought the lows registered on December 31st in the DXY (at 80.39) were THE lows from which said cyclical rally was expected to take place. However, the price action from that point suggests one more new swing low beneath 80.39 (toward a Fibonacci projection of 78.48 +/-) is now the most probable short term path.
Below are both the weekly and daily charts with our "count" from the 2001 peaks to present. Do we remain highly bearish on the USD long term? You bet. But markets do not move in straight lines, they progress and egress. And our models have the DXY 3.9% or so and perhaps 30-40 days away from an important low. Stay tuned.
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