John Fortune Profile picture
Apr 27, 2022 25 tweets 10 min read Read on X
First up let me just say, I cannot predict the future...

I can offer 12+ years of market experience & nothing more

The $Dxy has positioned itself for a humongous Bullish move...

Major multi year & even multi decade #Dxy breakouts are happening *Right Now*

Charts Below 📈🧵👇
Lets start by looking at the $Dxy itself (Monthly Chart)

On this time frame we are close to breaking out of a 7 year consolidation (when the 2015 rally stalled out)

This failure to make a low, followed by a break higher, tends to create a large amount of short covering...
As shorts close out positions on the breakout & new traders add long positions, explosive moves tend to follow

These are the mechanics behind what some traders refer to as a "Wave 3"

To me it's just mechanics of a successful breakout, but "Wave 3" if it helps understanding...
The bare minimum you'd expect a successful breakout here to go to is 1 x the 1st leg before the failed low

That would put $Dxy at almost 118. The *technical extension of this move would actually be 2.618 which would be 141.5!

I've seen TONNES of these go to 2,3,4 X & more...
So ok, let's not get carried away. Lets take 118 conservatively & look for context on even higher time frames

Wow - On a yearly chart the 7 year consolidation we're about to try & break out of was a RE-TEST of a prior 7 year breakout

1x prior move (Conservative Target) = 135!
Were I trading this on lower timeframes, as I have done many many times, I'd at least be looking at that previous high at 121.02, not much more than the Monthly 1x target from earlier (118)

That previous high is... 2001. The Dot Com crash 😮
So if the #US falls into recession, as seems likely, it looks very feasible we could see 118-121 again on a flight to safety

Surely it couldn't get higher than that? FED wouldn't allow it

Only time it rallied higher before was 1982/85...

The Volcker Shock to crush inflation😅
Ok, so the Volcker era isn't exactly the same as now.

US Interest Rates at 20% are Good Night Vienna with current US Debt levels.

Fact is #FED now has to crush inflation & the last time it did that the $DXY went to a high of 164.72

$Dxy at 118 to 121 sounds less & less crazy..
The next thing to look at then is $Dxy vs other currencies. If a big rally is coming in the $Dxy, it is going to show up across multiple pairs & charts

Lets start with the obvious $EurUsd

Same Monthly set up but reversed

Conservative Target 0.8716

Technical Target 0.5610...
$EurUsd Yearly Chart

Price broke out of an 8 year range in 2015 & spent the last 6 /7 years correcting & re-testing the breakout

A conservative target of 1x previous moves gets us to 0.6687.

Again, were I trading it short term I'd be almost certain of getting that prior low...
The chart that needs no introduction... $UsdJpy Monthly

It doesn't get more Bullish than this. New trends forming on multiple time horizons.

The BOJ are buying bonds like they're going out of fashion. But if there is a crash, wont $JPY get bid?...
Interestingly an important High sits between the 1x & 2.618x targets for the smaller trend

147.65 is the price $UsdJpy rallied to in 1998 before Russia defaulted on its debt & markets crashed

Amazingly, a 145.65 $UsdJpy & a Russian Debt Default are currently both possible...
I question whether we once again trade into the 147.65 high in #UsdJpy just as something truly breaks. This will be an interesting one to watch

Just imagine if $UsdJpy traded into 145.65 & markets crashed on a Russian Debt Default again...
You can see on the $UsdJpy Yearly Chart..

The Higher Degree breakout (New Trend) is in fact an Inverse Head & Shoulders dating back to the Russian Financial Crisis

A 1x move (textbook H&S Target) takes us right back to the previous '78 low of 177.30

138-148 isn't crazy here...
$GbpUsd Monthly

This is arguably the worst one.

Forget 2.618 targets, a conservative 1x Target gets us to 0.8451!

All the people who tried to trade this as a Double Bottom on the March 2020 spike low are now scrambling to get out having watched it fail to make a new high...
The ones who bought #GbpUsd higher up >1.3000 are now underwater & refuse to accept a loss. They are going to hold tight praying to the market gods until their stops get taken out at 1.1414

At which point new traders will add short positions & breakout mechanics kick in again...
$GbpUsd Yearly Chart gets worse

This is the chart that caused me to change my own $Gbp into $Usd a while ago

The new Monthly trend is from a re-test of a 20 year H&S with the overall consolidation going back 30 years!

Both 1x Target & Technical H&S Target are about -55% /0.600
Same signs in EM - $UsdPln Quarterly Chart

Notice the traders who shorted resistance, only to see price fail to make a new low.

Now notice the big "explosive move" through the High as they covered their shorts

Breakout mechanics at work

This *despite Polish CB intervention...
Conservative Target = 5.3

Technical Target = 6.9

Again, I can't predict the future, but I can tell you how large trends begin. They begin like this...
$UsdNok Yearly Chart

The 2020 Covid Crash caused a multi decade breakout in #UsdNok

For 35 years this pair has tried to make a new low below the '78 low. It failed

A brand new Bull market was born in 2020

No follow through for the 9.835 shorts. They are now short covering...
$UsdSek Quarterly Chart

A 14 year Inverse Head & Shoulders broke in 2016

Twice sellers tried to sell resistance. The previous attempt failed to make a new low & you can see from the recent momentum those same sellers are now scrambling to get out

Breakout mechanics at work...
These are just some of the clearer set ups which point to a significant & imminent strengthening of $Dxy

Fundamentally I'm bearish on the Global Economy & as followers will know I tweeted on March 6th that a recession was coming

These charts confirm that Macro outlook IMO
The reason for this thread *now* then is not only are we at the point of major $Dxy breakouts, we also have a big, fundamentally Bullish #Usd catalyst - a potential Global Recession

It's precisely when major technicals & major fundamental drivers align that you get major moves..
In summary, whilst I don't have a crystal ball, the alignment of major US #Dollar technical breakouts & a potential Global Recession puts many of these 1x Targets into play

Charts posted above show new trends forming, but there are many signs of unusual $Dxy strength...

$UsdCnh
$UsdZar Weekly

1.5 year Inverse H&S Breakout

Sellers tried to short back below the neckline, now they're scrambling to cover the shorts having failed to drive price lower. New buyers step in

Breakout mechanics at work

1x Target +9%

But previous high in play @ $19/+20%

END

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