I wanted to share what I think is one of the more important long term FX observations (massive non-confirmation between USDSEK and DXY). The chart and comments below first appeared in the 8/21 SB Swing Update. If you like what you see and think that the information could help in your trading process, then consider joining the SB community (click here for more). Also, I recently took part in ‘Trader Fest 2019’, presenting Jesse Livermore’s pivotal points concept. The event was hosted by Australian firm Pepperstone. You can watch the presentations here, including a Q&A with Market Wizard Linda Raschke.
USDSEK and DXY Weekly
USDSEK traded into its Feb/March 1985 high on Tuesday and reversed sharply today. Feb/March 1985 was the all-time high in DXY. The Plaza Accord (coordinated intervention to weaken the USD) took place in Sep 1985. Despite USDSEK trading to its highest since 2002, DXY is still below the 2017 high (high was on the first trading day of the year in 2017). This is a massive non-confirmation (think Dow theory but for FX). The opposite situation occurred at lows in the 1970s. In 1975, USDSEK traded to a new low but DXY did not. This marked a temporary low. In June 1980, DXY made its final low as USDSEK was well above its 1975 low. A sharp USD uptrend followed. The current non-confirmation sets up for a sharp USD downtrend.