This month's very bullish candle for the U.S. Dollar Index (DXY) is a transition one as it marks the end of the previous 3 year Cycle and the start of a new one. The previous Cycle was basically a neutral one, and it remains to be seen whether the current will be Bearish or Bullish.
The chart is pretty self-explanatory and as you see each Cycle is approximately 39 months in duration. This is a very consistent categorization which is holding very well since late 2001. What can make a difference right now as to what trend the new Cycle will follow, are the 1M MA50 (blue trend-line) and 1M MA100 (green trend-line).
After the 1st Cycle, those two formed a Death Cross (the 1M MA50 crossed below the 1M MA100) and the Cycle that followed was Bearish (ended with a Lower Low). Similarly after the 4th Cycle, a Golden Cross was formed (the 1M MA50 crossed above the 1M MA100) making the Cycle that followed a Bullish one (ended with a Higher High).
Right now we are getting closer to a new Death Cross. Will that mean that the new 3 year Cycle on the USD will be Bearish?
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my guess - BULLISH - the EU is not acting in unity and the Covid-19 measures are a disaster. The US will overcome Europe economically and all the USD that was pumped will take it's economic effect in favor of the Dollar.
zado
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@CarpeMomentum, Ha you are right about europe and unity but looking overall EU has a much better living standard vs US. What was once USA is now EU. I am afraid that China will be dominant in the near future. Printing dolars is a short term win, longterm is a disaster wating to happen.
Sobhan_23
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Magnificent
financialflagship
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Solid and detailed analysis, thanks for sharing mate! π