LTC/USD – June 2022 cycle against cycle in US Dollar Index

One of the well known facts of the market are correlations between instruments. However that rule does not apply every time in every instrument. Here at Elliott Wave Forecast we call a first degree correlation when 2 instruments move in accordance to their correlated nature. The opposite is called second dimension correlation. It occurs when the 2 correlated instruments do not move tick by tick the same and deviate the rule of first degree correlation. In this article we will overlay LTCUSD and USDX to see how a second dimension has been unfolding since cycle from 06.14.22.

Firstly, let’s have a look at Litecoin cycle from 06.14.22.

LTC/USD – Daily chart – Cycle from 06.14.22

We can see that Litecoin started a new cycle since 06.14.22. So far it looks to be within 5 waves. Currently wave (4) pivot is holding and we can potentially see one more leg higher to end larger degree wave ((1)) towards 90 – 100 area. Also from 06.14.22 until it ended wave (3) has moved up by about 110%.
Most traders after seeing the move would automatically assume that the USDX would have moved inverse to the move in LTCUSD. Well let’s have a look at the USDX next.

US Dollar Index – Daily chart within cycle from 09.28.22

The USDX is at the same level since 06.14.22 when Litecoin started its cycle. The 2 instruments have separated themselves from first degree correlation to second. Wave ((3)) cycle in USDX ended 09.28.22. In Litecoin as of today’s data larger degree cycle ended on 06.14.22.