DXY - 48 Hrs.
The Fed and especially Jerome Powell have ensured that the US stock markets are more overbought than they have been in years - and yesterday on the big expiry day with gigantic volume (options and futures expire). That was and is the majority opinion of most reporters and/or broker analysts. Which I fundamentally don't dispute. But at this point I would like to summarize this statements a little more detail. Because it is not the FED Chairman who moves the prices, but rather all the actors around him who press the buy or sell button. And/or call their brokers to execute your transactions.
So what exactly did Fed Chairman say?
“Inflation has fallen, but it is still too high.”
“We anticipate getting inflation to 2% will take some time.”
“Are prepared to raise rates further if necessary.”
I think, for example, that these three selected statements by the FED Chairman from the FOMC Statement have not given us attentive observers of the US Federal Reserve any great new information! Or? In complete contrast to the public press conference that followed. When, after reading the FOMC statement, he answered questions from selected journalists as scheduled. And when asked about an impending recession, he replied: “That’s always a possibility, but it doesn’t look like it at the moment.” So that the majority of financial market participants are no longer asking themselves whether the US economy will grow out of stagflation, but rather when? And based on this, the question naturally arose as to whether further interest rate increases are necessary in order to push inflation down to 2% and below? Which was also asked in the question and answer session. And Fed Chairman Powell responded with the following words, in two select cases: "We don't think we will raise rates, but we don't want to take the possibility off the table." And/Or also: “At the last meeting we assumed that we would raise interest rates further, but we are no longer doing that.” Volatility is therefore guaranteed around Christmas time 2023 and/or also for the start of 2024. With these words, Powell captured the imagination of stock market bulls. The optimists on WallStreet, if you will, have been verbally freed from their straitjacket (further interest rate cuts). What you can hear enjoy looking back in the recorded Bloomberg Surveillance Live FED Coverage video.
3 complementary articles worth reading
Reuters from 2023/12/14
Howard Schneider and Ann Saphir: "With rate hikes likely done, Fed turns to timing of cuts"
Barron`s from 2023/12/14
Nicholas Jasinski & Megan Leonhardt: "Fed's December Meeting: Live Coberage & Concluded"
CNBC from 2023/12/15
Yun Li: "Fed’s John Williams says the central bank isn’t ‘really talking about rate cuts right now’"
DXY - Another 48 Hrs.
Building on the findings of the monthly detailed overview (from yesterday), we start the technical analysis on a weekly basis with 92,630 points. As I wrote yesterday: And those 92,630 points are really, i mean really really, important in two ways. At least in my humble opinion, in the historical context when you focus on price action. Because they are more or less something like an average value of the historical low of 70,698 points (March 2008) and/or the last high of 114,778 points (September 2022). Because, if the DXY were to trade below 92,630 points again, we would have to describe the price action in the DXY again in terms of a bear market. But that has no longer been the case since January 2015. Which is why - since January 2015 and with price action above 92,630 - we can speak of a historical trend reversal formation in the DXY. Today I would also like to pay attention to the 88,253 points. Which, admittedly, I could have written yesterday. But yesterday I wanted to focus more on the whole picture - so today (building on that) we'll concentrate on 92,630 points and/or 88,253 points. And that because when the DXY trades below 92,630 points, we can not longer assume a bullish historical trend reversal formation, starting from the historical low of 70,698 points (March 2008). And in the case of a trading price action below 88,253 points (February 2018), a medium-term bearish trend reversal formation will have formed in retrospect.
In the past calendar week, the 52 week SMA (simple moving average) was broken down again.
So, looking back, we can now speak of a short-term trend reversal formation above the 52 SMA. Because the upward breakout in September 2023 has already been confirmed both - in the last week and/or in the 3 weeks before. What I didn't show on the chart! But what I have drawn in the weekly candlestick chart is the bearish trend reversal formation - and above all the 3 weeks (with a light red downward arrow), which visually demonstrate the current short-term selling pressure on the DXY. Which could consequently mean that we will tend to continue to have selling pressure in the DXY. Because everyone who temporarily assumed that the DXY would tend to rise, including my humble self, now has to readjust. And this is also due to the monetary policy of the FED - and/or rather the reaction of the majority of foreign exchange market investors. Because if we consistently argue rationally without emotions, then we have to note that in the last 7 calendar weeks (including this past one), the DXY became cheaper 5 times over the course of the week and/or only increased in price twice. And if things continue like this? Which is what I've been assuming since this weekend! It's only a matter of time before we trade the DXY below 100 points - and even lower - again.
Let´s play an example expectation scenario.
The last high in the DXY was 11 calendar weeks ago (including these past ones) at 107,348 points. The last low of this past 11th calendar week was traded at 101,770 points in this past calendar week. Which makes a price drop of up to 5,578 points - within 11 calendar weeks. And if we now assume that a) this trend is confirmed? b) we can also give the DXY twice as much time in a relaxed manner? then we can assume for the 1st quarter of 2024 (end of February 2024 and/or beginning of March 2024) that the DXY can trade more or less around 96.192 points. The emphasis is on can be traded - not that we will trade the 96,192 points! But I don't want to go that far at this point. However, I am also assuming today that we will trade at least 99,578 points in the 1st quarter of 2024 - possibly even lower points in the DXY.
may the price action be with you:
aaron
The Fed and especially Jerome Powell have ensured that the US stock markets are more overbought than they have been in years - and yesterday on the big expiry day with gigantic volume (options and futures expire). That was and is the majority opinion of most reporters and/or broker analysts. Which I fundamentally don't dispute. But at this point I would like to summarize this statements a little more detail. Because it is not the FED Chairman who moves the prices, but rather all the actors around him who press the buy or sell button. And/or call their brokers to execute your transactions.
So what exactly did Fed Chairman say?
“Inflation has fallen, but it is still too high.”
“We anticipate getting inflation to 2% will take some time.”
“Are prepared to raise rates further if necessary.”
I think, for example, that these three selected statements by the FED Chairman from the FOMC Statement have not given us attentive observers of the US Federal Reserve any great new information! Or? In complete contrast to the public press conference that followed. When, after reading the FOMC statement, he answered questions from selected journalists as scheduled. And when asked about an impending recession, he replied: “That’s always a possibility, but it doesn’t look like it at the moment.” So that the majority of financial market participants are no longer asking themselves whether the US economy will grow out of stagflation, but rather when? And based on this, the question naturally arose as to whether further interest rate increases are necessary in order to push inflation down to 2% and below? Which was also asked in the question and answer session. And Fed Chairman Powell responded with the following words, in two select cases: "We don't think we will raise rates, but we don't want to take the possibility off the table." And/Or also: “At the last meeting we assumed that we would raise interest rates further, but we are no longer doing that.” Volatility is therefore guaranteed around Christmas time 2023 and/or also for the start of 2024. With these words, Powell captured the imagination of stock market bulls. The optimists on WallStreet, if you will, have been verbally freed from their straitjacket (further interest rate cuts). What you can hear enjoy looking back in the recorded Bloomberg Surveillance Live FED Coverage video.
3 complementary articles worth reading
Reuters from 2023/12/14
Howard Schneider and Ann Saphir: "With rate hikes likely done, Fed turns to timing of cuts"
Barron`s from 2023/12/14
Nicholas Jasinski & Megan Leonhardt: "Fed's December Meeting: Live Coberage & Concluded"
CNBC from 2023/12/15
Yun Li: "Fed’s John Williams says the central bank isn’t ‘really talking about rate cuts right now’"
DXY - Another 48 Hrs.
Building on the findings of the monthly detailed overview (from yesterday), we start the technical analysis on a weekly basis with 92,630 points. As I wrote yesterday: And those 92,630 points are really, i mean really really, important in two ways. At least in my humble opinion, in the historical context when you focus on price action. Because they are more or less something like an average value of the historical low of 70,698 points (March 2008) and/or the last high of 114,778 points (September 2022). Because, if the DXY were to trade below 92,630 points again, we would have to describe the price action in the DXY again in terms of a bear market. But that has no longer been the case since January 2015. Which is why - since January 2015 and with price action above 92,630 - we can speak of a historical trend reversal formation in the DXY. Today I would also like to pay attention to the 88,253 points. Which, admittedly, I could have written yesterday. But yesterday I wanted to focus more on the whole picture - so today (building on that) we'll concentrate on 92,630 points and/or 88,253 points. And that because when the DXY trades below 92,630 points, we can not longer assume a bullish historical trend reversal formation, starting from the historical low of 70,698 points (March 2008). And in the case of a trading price action below 88,253 points (February 2018), a medium-term bearish trend reversal formation will have formed in retrospect.
- 116,080 points: High during 9/11 terrorist attacks in September 2001
- 114,778 points: c) Intermediate high from September 2022
- 111,310 points: Low during 9/11 terrorist attacks in September 2001
- 105,883 points: 13 Week Pivot High from 2023/03/06
- 103,820 points: b) Interim high from January 2017
- 103,543 points: 52 Week SMA (Simple Moving Average)
- 102,992 points: High during Corona Virus outbreak in March 2020
- 102,594 points: last price action
- 099,578 points: C) interim low from July 2023
- 094,650 points: Low during Corona Virus outbreak in March 2020
- 093,437 points: 13 Week Pivot High from 2021/03/29
- 092,630 points: a) Intermediate high from November 2005
- 089,535 points: 13 Week Pivot Low 2021/05/24
- 089,209 points: 13 Week Pivot Low from 2021/01/04
- 088,253 points: B) Intermediate low from February 2018
- 070,698 points: A) Interim low from March 2008 - also a historic low
In the past calendar week, the 52 week SMA (simple moving average) was broken down again.
So, looking back, we can now speak of a short-term trend reversal formation above the 52 SMA. Because the upward breakout in September 2023 has already been confirmed both - in the last week and/or in the 3 weeks before. What I didn't show on the chart! But what I have drawn in the weekly candlestick chart is the bearish trend reversal formation - and above all the 3 weeks (with a light red downward arrow), which visually demonstrate the current short-term selling pressure on the DXY. Which could consequently mean that we will tend to continue to have selling pressure in the DXY. Because everyone who temporarily assumed that the DXY would tend to rise, including my humble self, now has to readjust. And this is also due to the monetary policy of the FED - and/or rather the reaction of the majority of foreign exchange market investors. Because if we consistently argue rationally without emotions, then we have to note that in the last 7 calendar weeks (including this past one), the DXY became cheaper 5 times over the course of the week and/or only increased in price twice. And if things continue like this? Which is what I've been assuming since this weekend! It's only a matter of time before we trade the DXY below 100 points - and even lower - again.
Let´s play an example expectation scenario.
The last high in the DXY was 11 calendar weeks ago (including these past ones) at 107,348 points. The last low of this past 11th calendar week was traded at 101,770 points in this past calendar week. Which makes a price drop of up to 5,578 points - within 11 calendar weeks. And if we now assume that a) this trend is confirmed? b) we can also give the DXY twice as much time in a relaxed manner? then we can assume for the 1st quarter of 2024 (end of February 2024 and/or beginning of March 2024) that the DXY can trade more or less around 96.192 points. The emphasis is on can be traded - not that we will trade the 96,192 points! But I don't want to go that far at this point. However, I am also assuming today that we will trade at least 99,578 points in the 1st quarter of 2024 - possibly even lower points in the DXY.
may the price action be with you:
aaron
