**DXY, SPX and Wave Structures Analysis**
*Originally authored by Chris Svorcik, as published on FXStreet*
Christopher Svorcik, a seasoned Elliott Wave analyst, presents his analysis of the U.S. Dollar Index (DXY) and the broader S&P 500 Index (SPX), using a combination of Elliott Wave Theory, price action, and technical indicators. This article delves deeper into his points, expands upon his views, and includes insights from other expert analysis to provide a comprehensive view of the current state and potential future of these two benchmark indices.
## U.S. Dollar Index (DXY) Outlook
The DXY, which measures the strength of the U.S. dollar against a basket of six major foreign currencies, remains a central focus for traders amid ongoing economic uncertainty, inflation trends, and Federal Reserve policy decisions.
### Strong Bull Trend Until Mid-2023
– The DXY showed a robust upward trend through 2022 and early 2023, hitting multi-decade highs boosted by the Federal Reserve’s interest rate hikes.
– This bullish sentiment was driven by the U.S. central bank’s attempt to control persistent inflation.
### Recent Reversal Patterns
According to Svorcik’s wave analysis, there’s potential for a medium- to long-term bearish wave structure if the DXY cannot sustain above key resistance zones. Here’s how he breaks it down using Elliott Wave Theory:
– A 5-wave bullish structure may have already completed on the weekly chart.
– Price action suggests the formation of either an ABC corrective wave or a new bearish impulse.
– The formation of lower highs and lower lows is viewed as a red flag for the dollar’s strength continuing over the longer term.
#### Key Technical Levels
– Resistance is present near the 106–107 area on the DXY index.
– A sustained move above 107 would invalidate the current bearish setup and could suggest continuation of the uptrend towards 109–110.
– However, a move below 104 signals potential for further downside, confirming a bearish wave structure.
### Elliott Wave Forecast
Applying the Elliott Wave principles:
– The current correction may represent Wave B in a potential ABC pattern, which, if completed, could lead to Wave C downward.
– The anticipated completion of Wave B at resistance marks a potential reversal zone for the bears to take control.
– An impulsive drop from those levels would support bearish continuity.
**Implications for Forex Traders:**
– EUR/USD, GBP/USD, and USD/JPY trades are closely tied to movements in DXY.
– A weakening dollar could support EUR/USD breaking above resistance near 1.10, while USD/JPY may reverse from highs near 150.
## S&P 500 Index (SPX) – Mixed Signals in Equities Market
The SPX, representing the 500 largest publicly traded companies in the U.S., has seen a complex price pattern in 2023 amid conflicting macro data, earnings reports, and central bank guidance.
### Cyclical Recovery Meets Resistance
– Following the October 2022 low, the SPX has staged a notable recovery, largely led by tech megacaps.
– However, momentum is showing signs of exhaustion, and past weeks have presented overlapping wave structures.
– The presence of choppy price action indicates potential distribution or a longer corrective pattern.
### Elliott Wave Analysis: SPX Structure
Chris Svorcik outlines a possible bearish correction on the horizon. Here’s what the wave count suggests:
– The SPX may be completing Wave C of an overall A-B-C corrective structure from the 2022 lows.
– The rally could be a Wave B or Wave X, which points to the potential for another leg down (Wave C or Y).
– Confirmation of bearish sentiment would require a break below the pivotal 4200–4300 support zone.
#### Technical Confluences
– Fibonacci retracement zones show resistance at 4600–4700, coinc
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