Introduction
The U.S. Dollar Index (DXY) plays a critical role in global markets, especially for commodities like Gold and Silver.
Instead of focusing on short-term moves or macro headlines, this analysis studies the monthly price structure of DXY using Elliott Wave principles, Fibonacci retracements, and momentum behaviour.
The goal is not to predict, but to understand where DXY stands in its long-term cycle and what that implies structurally.
Big Picture Overview (Monthly)
DXY completed a major impulsive advance into the 2022 peak near the 114–115 region.
That move fits well as a five-wave (I–II–III–IV–V) impulse, supported by:
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Strong upside momentum
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Extended trend channel
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Exhaustion signals near the peak
Since that high, DXY behaviour has changed character.
Post-2022: From Impulse to Correction
After the 2022 peak, price action has become:
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Overlapping
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Time-consuming
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Range-bound
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Momentum-neutral
These are not characteristics of a new impulsive uptrend.
Instead, DXY appears to be in a complex corrective phase, best interpreted as a W–X–Y type correction.
This means:
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Declines and rallies are both corrective
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No clear long-term trend dominance
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Sideways-to-downward bias over time
Why This Is Likely a Complex Correction (W–X–Y)
Several factors support this view:
1. Price Behaviour
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Rallies fail to extend impulsively
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Declines overlap with prior swings
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Structure lacks directional clarity
2. Channel Breakdown
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DXY broke below its long-term rising channel post-2022
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Former trend support is now acting as resistance
3. RSI Behaviour (Monthly)
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RSI hovering around the 50 zone
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No sustained bullish momentum
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Typical of corrective, non-trending environments
Together, these point to distribution and correction, not trend continuation.
Key Levels to Watch (Context Only)
These are structural reference levels, not trading signals.
🔹 Resistance / Supply Zone
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100 – 103
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Heavy supply area
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Former support turned resistance
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Rallies into this zone are corrective in nature
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🔹 Balance / Pivot Zone
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97 – 98
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Current equilibrium area
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Price often reacts and consolidates here
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🔹 Corrective Support Zones
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92 – 94
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First major corrective magnet
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87 – 84
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Deeper corrective zone (alternate Y scenario)
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These zones represent where the correction could mature, not guaranteed destinations.
🔻 Invalidation Level (Important)
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Sustained monthly close above 105–106
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Would force reassessment of the corrective thesis
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Until then, the correction remains dominant
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What This Means for Markets (Conceptual)
When DXY is:
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Impulsive and trending → pressure on commodities
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Corrective and range-bound → supportive for commodities
The current DXY structure aligns well with:
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Strength in Gold
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Strength in Silver
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Relative underperformance of the dollar
This is structural alignment, not coincidence.
Important Things to Note (For Readers)
✅ Do
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Use this to understand macro structure
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Expect choppy rallies and pullbacks
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Be patient in non-trending environments
❌ Don’t
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Assume every rally is bullish
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Expect straight-line moves
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Use this as a short-term trading signal
Complex corrections are slow and frustrating by nature.
Summary
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DXY completed a major impulsive cycle into 2022
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Current phase is a complex corrective structure (W–X–Y)
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Price action is overlapping and momentum is neutral
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100–103 acts as resistance
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92–94 and 87–84 are key corrective zones
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Corrective structure remains valid below 105–106
Disclaimer
This analysis is for educational and informational purposes only. It represents a technical perspective based on Elliott Wave theory and should not be considered financial advice.
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