Blocksmith Says: DXY Bottoming, Bad News for Crypto

Christopher Grafton -

Dollar Index (DXY) bottoming? The dollar’s direction is key to macro rotation at the moment and my view is that US dollar will rally, which is negative from crypto.

I have plotted two FLDs, one for the 80-day cycle (blue) and the other for the 40-week cycle (green). The downside price cross of the 80-day FLD on 30 October (X) tells us two things:

  1. A downside projection of 106.7 (the close at the 15 November was 106.3 and potentially a capitulation day).
  2. It confirmed the 29 September peak as that of at least the 80-day cycle.

The implication, therefore, is that price is very likely in at the minimum an 80-day cycle trough zone right now, which is bullish.

Additionally, price pretty much landed on the 40-week FLD, which could represent high magnitude cycle trough support. Thus, we are looking for at least an 80-day cycle and possibly even a 40-week cycle to trough around now. Once the turn is in, the next upside aiming point would be the 40-day cycle peak due in the first or second week of December.

Key levels to watch: circa 107.3 is the ceiling of the mini base-zone that looks to be forming and we need a close above that level to confirm. Conversely, a break below 105.3 would force a rethink. This, however, is not the preferred view.