Thread by @MisterSpread

Hello everyone,

1/23 This thread is dedicated to @SantiagoAuFund - Dollar Milkshake Theory.
I thought it's a good idea to break down the "ingredients" in DXY milkshake, but from TA only perspective.
Let's dive in 🧵👇:

Start with the video below first.

2/23 Good, now that you have watched the video I want to remind everyone that "The Dollar Milkshake Theory" is a THEORY not a certainty that those events will happen and that all #USD scenarios will play out.

Same thing for my TA breakdown, so take it with a grain of salt.

3/23 So everyone has a clear understanding of the #DXY , here is a quick explanation below:

The U.S. Dollar Index consists of 6 foreign currencies.:

Euro (EUR), JapaneseYen (JPY), BritishPound (GBP), Canadiandollar (CAD), SwedishKrona (SEK), Swiss Franc (CHF).

4/23 Because not every country is the same size, it’s only fair that each is given appropriate weights when calculating the U.S. dollar index.

Check out the current weights:

More details here:

babypips.com/learn/forex/wh…

5/23 OK, now that everyone knows the basics and knows what are the "ingredients" in the Milkshake.

Let's start preparing it and see what's the final potential cost.

We will start with #EURO since it has the biggest proportion out if it.

6/23 As mentioned few days ago, #EUROUSD printed a massive bearish flag on H4.

A lot of times these patterns morph into something else, however for now we have 2/3 steps checked.

Breakdown & Retest, so let's see if we get the continuation to the downside.

7/23 The measured target for this bearish-flag is $0.94 which means a move down of -4.76%.

Given the fact that EURO has 57.60% out of the DXY this leads to:

57.60 x 4.76% = +2.74176 move higher for DXY if target is reached.

8/23 Even if Price Action will invalidate this low time-frame pattern, in my opinion as long as buyers don't push and close EURUSD above 1.0 and also above 1.03 area, the downtrend is intact and any move higher can be a selling opportunity.

9/23 People think that 1.0 is important, in my opinion $0.995 is even more important on yearly chart.

This is where it had a breakout on July2002 and confirmed it as yearly support.

IF this gives way and we have a clear confirmation under it, $0.96 and $0.94 can be next.

10/23 Next up is #USDJPY and its monthly chart speaks by itself.

The price of UJ printed a textbook monthly reverse Head&Shoulders pattern.

The neckline was taken out in March this year and confirmed the move up when it broke above the 125 yearly resistance area.

11/23 The target for this pattern is the 167 area, meaning that half of this move is done.

With 20.47% left to go this leads to:

13.60 x 20.47% = +2.78392 move higher for DXY if target is reached.

12/23 Moving on to the "posh" side of this milkshake we reached #GBPUSD , who on monthly printed an almost perfect DoubleTop pattern.

On the 18th of August, we had the breakdown under the monthly Neckline at 1.1945 . We had also confirmation with the weekly close last week.

13/23 The measured target if this pattern plays out is the 0.99926 area.

I know this looks unfathomable as we speak, however charts are cold and don't care about our feelings or biases.

The 1st stop for GU on the way down at 1.14 area, where was the tick from March2020.

14/23 Going back to 1984 and we can better see why 1.1945 area was key and an important level to hold, but it didn't, so now 1.05 and even 0.99 are open.

GBP has 11.90 out of DXY so:

11.90 x 16.35% = +1.94565 move higher for DXY if target is reached.

15/23 Because the Dollar Milkshake has maple syrup in it, we reached #CADUSD .

Here we have 2 scenarios and almost every time when this area was lost, bigger drops followed.

At 0.765 area we have a huge yearly support, if this is broken 0.73 & 0.68 are open.

16/23 If Scenario1 comes to fruition, then 0.68 can be tapped as it happened in Jan2016 & Mar2020.
Yes, a 4.34% is more likely, but let's see if those lower wicks will be filled.

CAD has 9.10% out of DXY so:

9.10 x 10.97% = +0.99827 move higher for DXY if target is reached.

17/23 We have to have the cold side of our drink and that's #SEKUSD .

As sometimes when you drink milkshakes, you get a brain-freeze, this is how I felt when I checked $SEK monthly chart.

It broke with a thick candle under the trend line above of which it stayed since 2009.

18/23 Bouncing in July from the decades low, buyers pushed it above 0.096 yearly support but lost it again, so it was flipped from support to resistance and also printed a new Lower Low.

SEK has 4.20% out of DXY:
4.20 x 6.60% = +0.2772 move higher for DXY if target is reached.

19/23 You can't have a good milkshake without some chocolate. The best chocolate is in Switzerland and that brings us to #CHFUSD .
As its cousin the $EURO to no surprise the $CHF printed a bearish-flag on daily.
We don't have confirmation yet, but if 1.0355 is lost, is go time.

20/23 On monthly we can see better why 1.0355 is such an important level. CHFUSD broke down in April from an important monthly trend line, so 1st stop can be 0.977 & extended to 0.946.

CHF has 3.60% out of DXY:

4.20 x 8.65% = +0.3114 move higher for DXY if target is reached.

21/23 We reached the final part, the bill.

So let's see how much can be the future price of this Dollar Milkshake:

EURO: +2.74176
JPY: +2.78392
GBP: +1.94565
CAD: +0.99827
SEK: +0.2772
CHF: +0.3114

Current DXY price: 108.836
Future potential DXY price: 117.8942

22/23 The very interesting part? I placed this value (117.8942) on the DXY monthly chart and it lined up with the tops from 2000 to 2002.
If we line up the angle of the upper trend line and the timeline, we get to Dec2023 as potential date.

23/23 Nobody knows if we will get there then, but I'm keeping a close eye on this. In the end I will like to say that I know there are lots more factors to consider, but this was strictly DXY thesis.
Thanks also to @RaoulGMI platform @RealVision for the great explanatory video!