Another 48h - DXY Is Dancing On Volcano Around 2025 Highs Today

2024/12/20
Another 48h - DXY Is Dancing On Volcano Around 2025 Highs Today
“dxy is dancing like on a volcano around 2025 highs at year-end 2025!
is the price action justified? What does the technicals picture look like?”



In fact, Fed Chairman Powell made it clear with his statements last Wednesday this week that the time of cheap money since the Lehman Brothers crash in 2008 no longer exists for the stock markets - the expectations of an interest rate cutting cycle in Chicago in 2025 on the futures market have now been evaporated into thin air by traders and/or investors. The fact that US inflation has risen again in the last 3 months - and also the US PPI by +3.0% - while US economic growth is solid but stagnating, will probably ensure that the US is not currently growing from US stagflation. Meanwhile, my friend, a cfd broker analyst has been trying to convince me in the last few days that Trump's expected tariffs have made the central bank rethink, "completely different from what Powell had commented at the last meeting in November!" But in this case I think the problem is buried because the USA does not seem to be growing out of US stagflation - higher US Annual Growth Rate as US Inflation), while the US unemployment rate is threatening to rise at the same time. And that, at least in my opinion, is also the reason why the price action on Wall Street suddenly seems to be bearish again. And the hoped-for Christmas rally in 2024, let alone the New Year's rally in 2025, is in great jeopardy. What's wrong with December 2018 - except that unlike back then, Powell probably won't take back his statements. Because the monetary material facts simply no longer exist in December 2024 (as even in December 20187) - it is how it is - regardless of the mood. Which is why many people always talk about sentiments instead of price action and/or fundamental valuation criteria.

• Will the bulls recapture the terrain above 106.517 points again?
  
• Will the bears recapture the terrain under 104.447 points again?

That's what we wanted to learn last week, based on the price action in DXY . And we saw that the DXY actually closed at 106.945 points last Friday, December 13th, 2024 - even above the price action of 106.517 points. The price action is therefore again above the 1st annual year high, from 2024/04/16, at even 106.517 points. However, it is still below the terrain of the annual high of 2023, with 107.348 points, from 2023/10/03 and/or also the annual high of 2024, with 108.071 points, from 2024/11/22. Which is fundamentally bullish - as long as the price action can be defended by the US bulls above 106.517 points.

“It is dangerous to build systemic reforms on a close association with one particular government. Systemic reforms need broad public participation and support. That is what makes them irreversible.”
George Soros

• Will the bulls defend the terrain above 106.517 points this week?
  
• Or will the price action fall back to the Dec`24 low at 105.420 points?

The low is crucial because it is more or less also the intraday high from November 6th, 2024 at 105.441 points when Trump was re-elected. So, in the case of higher price action, we can de facto argue that the DXY has been rising since Trump's re-election. And we will find out this week, if the bulls defend the recaptured price action of 106.517 points from last week, i.e. the 1st Annual Year High 2024, from 2024/04/16, whether the bullish trend in the DXY will continue? Which is what I tend to assume, even if the price action stays above 106.517 points!


The last price action of the DXY is today
on Friday, the 20th December 2024 at 108.149 points.
This calendar week, everything was in the shadow of the Fed's interest rate cut yesterday, which was expected by most. If the Fed doesn't lower its interest rates by -0.25%, would that be a big surprise on the financial market, which could trigger an earthquake? But the FED delivered and the DXY also reacted accordingly - the price action is currently more or less today dancing around the annual high for 2024, like on a volcano!

108.153 : 2024/12/19 - last price action
108.071 : 2024/11/22 - Last Annual Of This Year 2024
107.821 : 2024/12/19 - Today's Intraday Low
106.806 : 2024/12/11 - Wednesday High Last Week
106.731 : 2024/12/02 - Monday High (1st Dec`24 Week)
106.720 : 2024/12/04 - Wednesday High (1st Dec`24 Week)
106.637 : 2024/12/10 - Tuesday High Last Week
106.602 : 2024/12/03 - Tuesday High (1st Dec`24 Week)
The big breakout from the trend reversal, from the summer of 2024, seems to be currently confirmed. Appears? Yes, because traders and/or investors have not (yet) left behind the preliminary annual high of 108.71 points, from 2024/11/22! If you will, the medium-term bullish trend in DXY is fully intact - evidence of DXY strength (vice versa: evidence of EURUSD weakness) - if price action moves above in the future. While price action of below 108.71 points, from 2024/11/22, could again show in the short term that the bears are temporarily taking command of the terrain in the DXY . Which wouldn't be a problem until the price action falls back into our small, fine upward trend channel. As long as the price action doesn't fall below our small, fine uptrend channel, everything is fine for the US dollar bulls! And it does look like that at the moment, due to the monetary policy of the FED and/or rather the traders and investors who trade or invest in the DXY . Because the trend is quite stable if we also use the SMA Cross trend following indicator as a benchmark. This proves that the breakout from the downward trend, in the form of our small, fine upward trend channel, could definitely have the power to ensure that the price action continues to rise. Because we had a consolidation phase before the eruption - when the bulls and bears of the last week and or even the last month were wondering what would happen next (during end of Nov`24 and/or start of Dec`24) - before the bulls started to dance with the bears on the volcano, to dance and sent the DXY to new old annual highs around 2024.


With best wishes
and with good intentions!
Aaron



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