The US Dollar index (DXY, DX-Y.NYB, USDX) started its uptrend in June of 2021.
We have been watching the index for a long time, and back in October 2022 we shared a first post about it, Keeping an Eye on the US Dollar Index, within these pages. We felt time was ripe for a trend reversal. Accompanying the index from underneath were its best respected moving average support lines, that we looked at as the confirmation indicator. At that time the index sat at 111.602.
3 weeks after that post, and nearly 17 months after the support lines registered, the support line broke. Shuttered. Smashed.
Was it merely a quick drop that was followed by an immediate bounce back, as seen multiple times before (however, above the best respected support lines)?
We checked the pulse again on December 3rd. It wasn’t the case.
Now that the year is out, we are curious to see what the index has been doing in the last month. Has it tried to recover and climb back above the support lines? Or was that trend reversal caught on time?
Here is the daily chart of the US Dollar index, overlaid with the broken moving average support lines: the 92-day SMA (body) and the 104-day SMA (wick):
Zooming in:
The year ends with the index facing down. Thanks to watching the price action around the best respected moving average support lines, we were able to catch the true trend reversal and avoid fake ones.
Happy new year!