Why I analyze the direction of DXY.

For a trader that trades GBPUSD like me, it is important to analyze the direction of DXY because DXY is negatively correlated with $GBPUSD. Knowing the direction of DXY is an additional confluence in trading $GBPUSD.

Here is how I analyze DXY direction.

Today's DXY direction analysis.

- DXY is showing a downtrend move.
- It took the sell side liquidity with equal low (SSL D TAKEN line) then moved up.
On its way up,
- it filled fair value gaps (purple shades). 1 fair value gap is not yet fully filled
- it took the 78.6% Fib level, which is the deepest optimal trade entry (OTE)

LONG bias: it is possible for DXY to continue moving up because there is a daily bearish order block just above (BearOB D line)

SHORT bias: it is also possible that DXY could reverse back down from here because it is showing signs of rejection of the 78.6% Fib level.

For this reasons, my bias for DXY is NEUTRAL.

Now it's time to analyze GBPUSD