Price and Time Convergence: Analyzing the Dollar's Impact on Risk Assets and a Potential Year-End Rally

A quick look at the dollar this morning as price and time come together.

There are a lot of implications for a strong or weak dollar but to keep it simple a falling dollar usually bodes well for risk assets like stocks and crypto.

Here is the DXY weekly chart. Overall, the dollar is in a big long term uptrend marked by the diagonal blue line that goes all the way back to 2011.

However, looking at the price action from the last few years we can see that we had a big drop from the 2022 high (which coincided with the low in stocks) and a rally in risk assets. Then the dollar reversed at the end of July and so did stock prices. So you can see the correlation.

Since the low where everyone was calling for the death of the dollar we have had an incredible rally.

But now price and time are coming together that may put an end to that rally and give stocks and crypto a boost.

We recently topped out right at the midpoint, 50 percent retracement line you can see marked on the chart. This is a key level for any asset to break above once it is in the downtrend. So far the dollar is getting rejected at this level. A good sign for risk.

At the same time we are exactly 144 weeks from the Jan 2021 low. A very significant number.

So we have price running into important resistance right as time aligns with a potential big turning point. Let’s see if the dollar continues to fall in the weeks and months ahead adding fuel for a year end rally.