DXY - How Does This Rally Compare to Historical Ones?
I did some quick back of napkin math. I logged the average duration of DXY overbought conditions before it properly rejected below the 70 RSI . This is all approximated based on the 4d DXY chart.
If you discount the two outliers (the 16d and 231d events) your average duration is 49 days overbought before seeing a proper rejection. If we included those outliers (like 2014-2015's over 200 days) then the average is 63 days. Currently we are on day 24 but with bearish divergences on lower timeframes.
If you include the late 2021 rally for DXY we are over 60 days already on this pattern, but there was a brief and sudden momentum breakdown for DXY from December to January that exited the peak overbought range, so I'll count it as two separate events.
It will be interesting to see how this plays out in coming days and weeks. While a narrative for a strong dollar had headwinds from mid last year, its also somewhat a house of cards and this is reflected in the bearish momentum divergences popping up. If the inflation narrative peaks or competing fiat currencies reverse course we may see a sudden reversal of fortunes for the dollar bulls. There is also the narrative from competing nation states looking to alternatives to the USD for transacting internationally that after the Russia sanctions that might gain strength.
If you discount the two outliers (the 16d and 231d events) your average duration is 49 days overbought before seeing a proper rejection. If we included those outliers (like 2014-2015's over 200 days) then the average is 63 days. Currently we are on day 24 but with bearish divergences on lower timeframes.
If you include the late 2021 rally for DXY we are over 60 days already on this pattern, but there was a brief and sudden momentum breakdown for DXY from December to January that exited the peak overbought range, so I'll count it as two separate events.
It will be interesting to see how this plays out in coming days and weeks. While a narrative for a strong dollar had headwinds from mid last year, its also somewhat a house of cards and this is reflected in the bearish momentum divergences popping up. If the inflation narrative peaks or competing fiat currencies reverse course we may see a sudden reversal of fortunes for the dollar bulls. There is also the narrative from competing nation states looking to alternatives to the USD for transacting internationally that after the Russia sanctions that might gain strength.