From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley
The US Dollar Index $DXY has been a good reminder that price doesn’t always move in a straight line.
Paul Tudor Jones has been quoted saying “markets only trend about 15% of the time.” The textbooks will tell you it’s somewhere between 20% and 30%. But it all comes down to how you’re measuring it.
We think it’s fair to say most markets trend about 25% of the time on a structural basis.
And the present year two market conditions have been a great illustration of what they look like the other 75% of the time… range-bound… sideways… a hot mess.
Speaking of which, last week, we pointed out that Dollar strength had stalled and that things were beginning to look messy on shorter time frames.
Many of the long USD trade setups we laid out in late June have yet to break out and are currently testing their respective risk levels, with the lone exception of the AUD/USD.
Mixed signals and indecision remain the case for the Dollar as DXY attempts to find its footing and take out the upper bounds of its year-to-date range… again.
Given the far-reaching impact the Dollar can have on risk assets around the globe, let’s take a step back, discuss the recent price action, and identify some critical levels of interest.