DXY May Signal Next Crash Across Stock and Crypto Markets
Within the four panels above are comparisons of major US market and the international Bitcoin indices with the US Dollar Index, $TVC:DXY. From top left to right:
As we can plainly see, each one acts a a near mirror image going back to 2017.
When looking at correlation via an indicator, like Correlation Coefficient, we would see regular swings from negative to positive on various timeframes and settings.
Yet, when viewing both indices over the years as shown above, there are several observations:
It's certainly possible that any of these markets could instead signal DXY's next move, or even move together at the same time with it (both of which have occurred before and even in cases on the chart above).
However, there has been a pattern since 2017 of DXY making local highs or lows prior to the indices above making their local lows or highs, at least when leading up to major spikes in DXY and crashes in markets, bringing them nearer to the middle.
Should DXY move up and back above 105-106 and then 112, and continue, it may signal the end of these recoveries we've been seeing over the last year, and could point to crashes across markets.
My present theory is that we may see something like double-tops with slightly higher or slightly lower highs, across many of these markets, and as DXY ranges between 101-106. This, leading to a breakout of that range and a move back above 112.
Should DXY turn down hard instead, we may see extended recoveries and new ATHs until it bounces again off monthly support and heads back up.
Many of the stock indices shown above are already near double-tops with potentially a bit more room to run up. Bitcoin hasn't yet caught up and has a lower weekly RSI, so it may be the last one to make a strong recovery before we see a downturn.
*** related ideas linked in the related ideas section ****
Thank you for reading!
-dudebruh :)
As we can plainly see, each one acts a a near mirror image going back to 2017.
When looking at correlation via an indicator, like Correlation Coefficient, we would see regular swings from negative to positive on various timeframes and settings.
Yet, when viewing both indices over the years as shown above, there are several observations:
- it becomes clear that there is a macro negative correlation between the dollar index and these major stock and crypto indices.
- There is also a consistent tendency for both to correct and eventually meet near the middle and/or see a crossover to the other side.
- Strong opposing reactions occur between these valleys of one meet or cross with peaks of the other (meeting in the middle or crossing), and when peaks of one drift furthest apart from valleys of the other.
- DXY often reaches local highs or lows prior to these market indices reaching lows or highs, or vice versa. One can act to forward indicate the direction of the other.
It's certainly possible that any of these markets could instead signal DXY's next move, or even move together at the same time with it (both of which have occurred before and even in cases on the chart above).
However, there has been a pattern since 2017 of DXY making local highs or lows prior to the indices above making their local lows or highs, at least when leading up to major spikes in DXY and crashes in markets, bringing them nearer to the middle.
Should DXY move up and back above 105-106 and then 112, and continue, it may signal the end of these recoveries we've been seeing over the last year, and could point to crashes across markets.
My present theory is that we may see something like double-tops with slightly higher or slightly lower highs, across many of these markets, and as DXY ranges between 101-106. This, leading to a breakout of that range and a move back above 112.
Should DXY turn down hard instead, we may see extended recoveries and new ATHs until it bounces again off monthly support and heads back up.
Many of the stock indices shown above are already near double-tops with potentially a bit more room to run up. Bitcoin hasn't yet caught up and has a lower weekly RSI, so it may be the last one to make a strong recovery before we see a downturn.
*** related ideas linked in the related ideas section ****
Thank you for reading!
-dudebruh :)
Trade active:
Pressing load new bars above shows that this macro negative correlation is still occurring. As DXY moves down to re-test its 50 day MA and EMA, and potentially weekly or monthly support, all of the markets above have begun moving up.
I'm expecting this will continue for some time before DXY finally turns back up breaking the 105-108 area and moving back above highs around 112-114 and continuing up, and this is where negative correlation may diverge a bit but eventually moving back into correlation strong - and crashes.
I'm expecting this will continue for some time before DXY finally turns back up breaking the 105-108 area and moving back above highs around 112-114 and continuing up, and this is where negative correlation may diverge a bit but eventually moving back into correlation strong - and crashes.
