Dollar Index – Weekly Analysis
In this weekly analysis, we apply our multi-frame methodology, combining candlestick structure, technical indicators, and Elliott Wave analysis, to assess the pressure building beneath the dollar and outline the scenarios that could define its next major move.
CANDLES
After last week’s bearish close, the U.S. Dollar Index closed this week with bearish signals again. This time, however, the formations and technicals are relatively weak and may point to proximity to a bottom.
Overall, DXY is neutral-bearish in the short and mid term, while the long-term outlook continues to favor the upside.
In the April monthly report, we discussed a developing 50/100 MA cross on the 4M frame. It has moved a few basis points closer.
ELLIOTT WAVES
At this stage, there is no substantial evidence to justify a change in the very long-term outlook. In March, the index possibly formed a long-term bottom, though it is yet to be confirmed.
Last Wave
As discussed last week, the Ending Diagonal hypothesis has started to materialize. One more lower low would make it a textbook diagonal and complete the zigzag structure.
If the move ends in the upper half of the rectangle, the zigzag would be truncated, which could multiply the agility of the next wave upward. However, a new low below the January low would invalidate the setup.
SUMMARY
DXY remains neutral-bearish in the short and mid term, but the weakness is not strongly supported and may be approaching a bottoming zone. The long-term outlook still favors the upside, especially as the rare 4M 50/100 MA cross continues to move closer.
From an Elliott Wave perspective, the Ending Diagonal hypothesis is starting to materialize. One more lower low could complete a cleaner diagonal and zigzag structure, while a truncated finish in the upper half of the target rectangle could strengthen the next upside wave. A break below the January low would invalidate this setup.
