Dollar Update

DX is Megaphoning Near the Red Megaphone VWAP

DX is Megaphoning Near the Red Megaphone VWAP

DX has started a megaphone near the red megaphone VWAP, which is the minimum retrace target for this dip.  DX is still likely to make it to the bottom of the blue rising megaphone before this dip is over and could go all the way to the red megaphone bottom.

The most likely scenario is the purple one, where the little pink megaphone keeps megaphoning.  The moves within the megaphone would typically get wilder to put in retests of the 2016 low and the high at the beginning of 2017.

The purple scenario would usually complete as a triangle or diamond continuation pattern.

DX Approaches Critical VWAP Level

DX Megaphone

DX is Approaching its Megaphone VWAP Level at 95

DX is approaching the VWAP level of its blue megaphone at roughly 95.

DX could slice through that level for a crash to the blue megaphone bottom, but it’s much more likely to bog down there and start a new megaphone that keeps the dollar moving sideways for a long time.

If we do get the purple scenario, it will establish the larger pink megaphone and DX will be a strong favorite to go for its top at least one more time.

Dollar Update

DX Put a Falling Wedge Right Shoulder on its Rising Megaphone (Orange) H&S Top (Red Neckline)

DX Put a Falling Wedge Right Shoulder on its Rising Megaphone (Orange) H&S Top (Red Neckline)

DX put a falling wedge right shoulder on the head and shoulders top for its orange rising megaphone—first time I can remember seeing that.

The rising wedge broke out downwards, of course, but it’s a small formation.  That suggests a target closer to the light blue megaphone VWAP than its bottom.

The orange rising megaphone retrace target is its bottom.

DX could go all the way for its light blue megaphone bottom but is a favorite to bog down at VWAP at roughly 95 and start a series of new megaphones inside megaphones there.

The green scenario would suggest a head and shoulders top is forming with a target of roughly 76.  I don’t buy that (I’ll trade it, though, if it happens).

The purple scenario would suggest a triangle continuation pattern is forming between the May 2016 low and January 2017 high.

DX Megaphone Update

DX is at the VWAP of a Multi-Decade Megaphone and Would Like to Stay There

The Dollar is at VWAP of a Multi-Decade Megaphone

The Dollar is at VWAP of a Multi-Decade Megaphone

DX is at VWAP of a multi-decade megaphone (red in chart above) and would prefer to never leave. At the same time, it’s got to retrace part of its 2014-’15 melt-up. The best way to meet both objectives is with a megaphone (blue in chart below).

DX Blew Its Chance at a Fast Top when it Completed an H&S Inside the Navy Blue Rising Megaphone Too Early

DX has Completed a H&S Top Inside its Navy Blue Rising Megaphone, But Too Soon - Means More Megaphoning is Likely

DX has Completed a H&S Top Inside its Navy Blue Rising Megaphone, But Too Soon – Means More Megaphoning is Likely

Right now DX is trying to complete a top within the red megaphone before a trip to its bottom to set up the larger blue megaphone.

DX put in a nice rising megaphone (navy blue on chart) to get up to the red megaphone top, but it needs a bit higher of a high to draw the blue megaphone properly.  So what DX has done is complete a head and shoulders top on the navy blue rising megaphone too early.

That Likely Means Prolonged Megaphoning Up Here

The strongest topping set-ups on rising megaphones are H&S formations with a right shoulder that’s a bounce off the rising megaphone bottom.  DX, because it put in its H&S right shoulder bounce inside the formation, is now morphing that right shoulder into a megaphone.

H&S megaphone right shoulders usually mean a squeaker new high to form a larger H&S or megaphone top.  Because DX has put off the pop to a squeaker new high so long, it’s unlikely to complete a larger H&S top inside the navy rising megaphone.  That means we’re likely to see prolonged megaphoning up here before the trip to the red megaphone bottom.

That will allow the trip to the red megaphone bottom to put in the entire retrace needed of the 2014-’15 melt-up.  Then DX can return to the red/blue megaphone VWAP and continue moving sideways.  Or it can return to the red/blue megaphone top to set up a potential breakout upwards.