DXY near a make or break zone!

10 Ağu 2022

DXY

As we can see in the chart, DXY has broken the most recent low which is an early indication of a downtrend. If DXY takes support in this region, we could see a good support being formed. The question is, how does it affect affect the stock market and economy as a whole.

Firstly, we need to understand the correlation between DXY and the stock market. Generally, when DXY moves down, the stock market goes up and vice versa. Considering the markets are at an important juncture, I will wait for some confirmation on the trend. If DXY breaks down, my bias will change from bearish to bullish on the stock market. To trade this bias, we need another confirmation on the Nifty50 chart. You can find the Nifty 50 analysis on my next post.

With the inversion in 10Y-2Y bond yields( Indication of recession), DXY falling and stock markets going up- there isn't any clear direction for me. I will wait for a couple of days to get my confirmation and then enter trades. It is always better to sit on cash and protect your capital if the markets aren't making sense to you!

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