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.

Dollar Rising Megaphones Suggest Another New High Coming

DX Rising Megaphones

DX Rising Megaphones

The Dollar Index (DX) has put in a rising megaphone (pink) within a rising megaphone (blue on chart).

DX broke out of the pink rising megaphone without completing a proper head and shoulders top first and promptly began megaphoning.  That would usually mean a new high outside the pink rising megaphone.

In addition, DX topped in December/January with exact tags on the blue rising megaphone top.  That would usually mean a new high inside the blue rising megaphone before breakout.

Plus the blue rising megaphone now has a beautiful head and shoulders top inside it.  Unfortunately, the right shoulder is not a bounce off the rising megaphone bottom.  Instead it’s a megaphone right shoulder (navy blue), which would usually mean a new high is coming for the head of a larger H&S top.

It all adds up to a likely new high for DX before a move to the blue rising megaphone bottom.  The new high will likely come after another false break of the red H&S neckline.

US Dollar Update

DX is at the VWAP of its Long-Term Megaphone (Red)

DX is at the VWAP of its Long-Term Megaphone (Red)

The dollar is hung up at the VWAP (volume-weighted average price) of a very long-term megaphone that began forming in the late 1980s (red on chart).  It’s also paused just above the breakout point from a falling wedge top connecting the 1985 and 2002 dollar highs.

DX Megaphone (Purple) vs Triangle (Green) Scenario

DX Megaphone (Purple) vs Triangle (Green) Scenario

DX got to its recent high within the red rising megaphone on the second chart.  That high pierced the formation top before reentering and would usually make a new high within the formation before breaking out of it.

Then DX must return to at least the base of the rising megaphone at roughly 93.

It could get there by returning to the blue megaphone VWAP at roughly 95 and starting a new megaphone there (green scenario).  The green scenario could produce a series of new megaphones inside megaphones across 95 to form a big continuation triangle before the dollar continues up to the top of its long-term red megaphone.

But it’s more likely that the dollar will continue through 95 to the bottom of its blue megaphone to form the larger orange megaphone.

DX Update

DX is Working on a H&S Top for its Blue Rising Megaphone Before a Likely Pullback to the Bottom of the Red Megaphone

DX is Working on a H&S Top for its Blue Rising Megaphone Before a Likely Pullback to the Bottom of the Red Megaphone

DX broke through the top of a flat-topped megaphone back in mid-November, and then hung around without really taking off.  That usually means it’s turning the flat-topped megaphone into a conventional megaphone (orange on chart).

DX also needs to retrace to the bottom of its blue rising megaphone.

DX could be completing the top before the dip right now, or it could work its way higher in another leg up for a taller head on a H&S top for the head of a larger H&S for the blue rising megaphone.

Euro futures have confirmed a falling wedge bottom.

Euro Futures Falling Wedge Bottom

Euro Futures Falling Wedge Bottom