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Dollar Index Shows Exhaustion Signals

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During this year, the US Dollar Index (DXY)  gains 2.16% (YTD). The current EW’s structure, suggests the exhaustion of the bullish cycle that started on February 16, 2018. In this post, we’ll review what could the next path be for the US Dollar Index.

The current wave

DXY moves in an ending diagonal pattern of primary degree. The bullish cycle may have been completed when the price reached the resistance at 98.93. If we observe the internal structure between the (E) – ((5)) segment, it shows five motive waves. The current move probably corresponds to the start of a corrective sequence. We should consider that, long-term, the next wave expected is a bearish wave C of Cycle degree.



In case that the bullish sequence continues, we anticipate a marginal upside which could reach the zone between the 99.37 and 100.27. The breakdown and close below the 97.04 level should provide a confirmation signal of the bearish bias.

Looking for commitment

However, the reach of the 98.93 level is not enough to say “we are reversing the bullish trend”. Reading the flow of money from institutional traders, we observe a marginal increase in short positions. The advance of the bearish bias increased from 26.74% to 27.36% in the last two weeks. To conclude, our prefered bias for DXY is neutral with a potential bearish indication.

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