If $DXY succeeds to (weekly) close above 76, other chart readers might find other patterns on the current chart supporting the opposite conclusion about the probs discussed in the above post. I do not believe in chart patterns for a number of reasons-- for instance different people might see different conflicting patterns on the same chart, which does not make the approach scientific. My analysis (not based on chart patterns) tells that $DXY may well be in a bottoming process, which if it succeeds might lead to a possible comeback of the king of the old days. In addition, I do not find a rise of $DXY to be inconsistent with a weakening dollar--- The index could rise while the dollar is weakening.
You know, I'm still slightly bullish, but I think we can all agree that the reaction to the jobs report wasn't "muted" at all. A straight hard dump of about 1% in the futures b4 the open is not "muted". Look at some of the misses in the past ( for example during Q1) and compare what you think is a "muted" reaction. This could really swing both ways at this point tbh. It could be enough to break the back of this rally and induce the summer chop, maybe all the way back down. OTOH we could just grind higher. For all the non-believers, fundamentals have been much more constructive on the upside. It's certainly not "bullshit" and ADP looks back. The numbers looking forward are more valuable. Not to mention the fact that jobs are mostly irrelevant. Given these facts the market's reaction to the number has me quite worried about the uptrend. I'll give it the benefit of the doubt still because the ES ran up so well into the close yesterday but I'm not really prepared to accept much more downside than this to wait out the trend continuation.
I do not see the appeal of goign short. It does not have enough profit potential. I guess, not being a professional, I like the unlimited up side.
You raise an important technical point by noting that: "DXY may well be in a bottoming process...". Indeed the bear flag is forming at an important prior low where there should be support . This, of course, adds ambiguity to the observation of a bear flag in the weekly DX chart. I was remiss in not mentioning this in my post above. Normally after consolidation within a down trend, one anticipates the trend to continue. However, in the present case that expectation must be tempered by the fact that the consolidation is occurring at strong support. From a purely technical standpoint I would consider a third close below 74.21 to have a high probability of taking us rather quickly to the next support at about 72. The DX is currently at 75.44
I'm puzzled by that remark, Journals. DX is the dollar relative to a basket of currencies. It has to follow the dollar relative to that basket. But perhaps you were referring to two different time scales and meant the short term trend could be up while the longer term trend is down, or vice versa. But regardless, the index can't rise while the dollar is weakening.