Another Great Reversal Print
Written by Site admin   
Wednesday, 03 June 2020 12:50

Could this become a Great Reversal?

The US$ interbank liquidity crisis and then the effects of Coronavirus, forced the Fed to inject massive reserves into the international banking system to stop its dollar from moving ever higher. The DXY chart suggests it might be working.

It show two classic reversal patterns that have been used by traders ever since technical analysis began.

In March the dollar crashed lower, then shot higher which could be the start of a Broadening pattern, occasionally found at major reversals.

Price action oscillates widely and eventually breaks out moving the same distance from the extreme as the depth of the pattern. That gives a target around the 2018 lows.

The bigger pattern is a potential double top, the first high at the end of 2016. Double tops are very common and again have a target based on the depth of pattern.

If the DXY were to break below those 2018 lows it could run on down to at least 80 where it spent the first five months of 2014 before breaking out of it's last major, triangle, reversal pattern.