Friday, June 18, 2021

#Dollar Index Review $UUP $UDX

US Dollar Review

Those that view the message of the market on daily basis are likely confused by trading noise. While trading noise contributes to long-term trends, it does not define them. The focus on short-term noise rather than trends, a source of confusion for the majority of investors, leads to the creation of bagholders at major trend transitions.

The US Dollar Index's overall trend, revealed by trends of price, leverage, and time, are defined in The Matrix for subscribers.

Subscriber Comments

Continuation of the dollar rally, a move that caught the majority unprepared, has them wondering why and how long? Subscribers should have been prepared for these questions before the rally. As discussed numerous times before, the rally in the dollar is being fueled by a large bullish energy build in the Major Currencies Composite DI (MCC DI) from the summer to fall of 2021.

The MCC DI is a more reliable measure of energy than the US Dollar Index DI because it's massive in comparison. The MCC DI is based on an unweighted measure of energy across all major currencies; The US Dollar Index is weighted and significantly smaller. The MCC total participation (open interest) is 30x greater than the US Dollar Index contracts. This makes MCC's DI more difficult to move, and reflective of real world capital flows.

While the US Dollar Index's DI & DI2 are well below 0 and showing a bearish concentration, I've warned subscribers (anyone asking) that the setup is likely early. The US Dollar Index DI, easier to move, has collapsed below -60%. The bearish setup has proved to be early, again. The Dollar's DI trading history shows us that DI, and even DI2, fell well below -60% before mark down, or pause in an uptrend materialized. Why? The US Dollar Index is smaller and easier to move. We're seeing a similar setup in Bitcoin. Does this invalidate the Dollar Index or Bitcoin's DIs? No. It only makes them early.

Major Currencies Composite DI (Line 61 Trends Tab of the Matrix)

US Dollar Index DI (Line 61 Trends Tab of the Matrix)

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