Another 48h - DXY In Breakout Scenario This Week

2024/11/10
Another 48h - DXY In Breakout Scenario This Week
“out of w trend reversal formation of last months!
what now, this week? confirmation? relapse?”



104.951 points : 2024/11/09 - last price action
104.426 points : 2024/08/02 - W Trend Reversal High
102.160 points : 2024/08/05 - W Trend Reversal Low
This price action is important, at least in my opinion, because share prices had already fallen on this Friday, after the publication of the monthly US labor market figures. And the sell-off accelerated on the following Monday, both in the DXY and/or on Wall Street, in the US stock markets DJIA & SP500 & IXIC incl. NDX . The Japanese stock market NI225 suffered its worst point loss ever on Monday - and the largest percentage decline since 1987. And fell as much as -12% on Monday, August 5, 2024, before recovering most of the losses on Tuesday. US indices also fell more than average on Monday, with the SP500 and IXIC closing around 3% lower. The British UKX and the European leading index SXXP each fell by 2%. And volatility indicators like the VIX were, at the time, at levels last seen during the pandemic sell-off in 2020. For better or worse, traders and/or investors were forced to close their derivative positions due to the US labor market data, as the USDJPY exchange rate pair continued to accelerate its downward trend from more than 160 USDJPY, which had started since July 2024. And in retrospect, this above-average fast and low price action in the USDJPY was more or less the main reason for these distortions - because the price action, as we now experience every day, is usually not that big. On the contrary - that's why I chose the DXY as a learning index, if you will.

“Financial markets are inherently unstable; stability can be maintained only if it is made an objective of public policy. Moreover, instability is cumulative.”
George Soros

This all, what i tried to describe, run to an exit, on Friday and/or following Monday, at the beginning of August 2024, exacerbated the feeling of panic - and so the price action in DXY and other asset classes moved as they did. The key to the market turbulence was and still is to be found in the monetary policy of the FED and the BOJ. After all, the circumstances that supported the record highs of the global markets this year 2024 were the high interest rates in the USA (5.25% - 5.50) and/or the low interest rates in Japan (0.25% after the interest rate hike last week before). Traders and/or Investors were and are still able to borrow in yen, which even until the last week before the w trend reversal formation, we had in USDJPY multi-decade lows, until the start of July 2024 incl. in higher-performing dollar assets such as technology stocks NDX and/or US10Y U.S. bonds. This process, which is called "carry trade" plunged during these two days - Friday, the 2nd 2024 and/or Monday, the 5th 2024 - on fears about the U.S. economy. And so, at the beginning of August 2024, expectations changed that the US Federal Reserve would cut interest rates faster and deeper than the majority of traders and/or investors previously thought - to support the US economy. And what happens in such scenarios if you get caught on the wrong foot in terms of monetary policy? Right - the majority's expectations change! And what about the price action? Correct - that's right also. The price action also rotates! How long? How high? How low? I don`t know! But I know that I will continue to study this daily, here with you! Which is why I've been emphasizing again and again since I started "Another 48 h - DXY ..." that the W formation is currently the main focus, not just from the POV (Point Of View) of the technical analysis.


With best wishes
and with good intentions!
Aaron



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