Ultra Long-Term $DXY Count

Here is a long-term bearish count for the Dollar Index. I have puzzled over this for many months now. It is conceivable that we remain within a multi-decade correction. The two most recent legs “down” (2017 & 2020; pink and orange “ones”) look very impulsive to me. It may suggest that since the 2017 high, the $DXY has begun a large impulse wave to the downside, a “c” wave of cycle degree.

Two points of interest: 1) How low can we go? and 2) How long will it take?

On the first point, a trend line strike below would be a reasonable place to speculate about while we are still this far away. It would give the whole structure the right “look.” But then there is the question of time, and that’s one thing that makes me believe we may have a long time to go in the equity markets before we see a major top. Normally, we want to see a relationship (even in time) between legs of a correction. And if cycle (yellow) “a” took twenty years, we will want to see cycle (yellow) “c” take some amount of time that has a relationship to the length of cycle (yellow) “a” in time.

Being conservative, and just looking at that trend line below leads me to speculate that the 61.8% extension of “c” over the length of “a” in time might be a good spot. But this suggests that the dollar will continue to weaken for almost another decade.

We should gain clues soon, based on the magnitude of the next leg down that I expect us to enter upon shortly (if we have not already).

DXY


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