Day trading strategy dollar index

The dollar index trades in the middle of the 89-range chart,
which tells me this should be a sloppy area. 
Anytime I’m in the middle of any range, especially on the 89-range chart
for the dollar index I need beware.
The 21-range chart, a much faster timeframe will show us the
short term levels of support and resistance along with any short term trend
that we can follow along with today also. 
We can see we’re trading above the PHOD so buyers have been strong
enough to break out of the trading range. 
We will buy pullbacks with new higher-highs when we are above the PHOD.  With that said though, we’re also at the
highs of the range, which leads me to believe this price will come back down.
Whats likely to happen next on the dollar index today?  We’re at the highs of the short term trading
ranges, so what SHOULD happen is either price falls off the highs and re-tests
the PHOD, or the price may trade sideways at the highs and go nowhere, or the
price may keep going higher and push new higher-highs.
Three scenarios on the dollar index tell us three different
options to prepare for.  If the dollar
index trades sideways at the highs we will sit on hands.  If the dollar index moves lower off this resistance
at the highs we will then buy pullbacks and if the dollar index moves higher,
pushing through resistance we will then sell retracements.

The last thing we check is the heat map, which
tells us the dollar index has been rising at +0.5%, which under normal
conditions will tell me to sell retracements using the negative
correlation.  Today however, we are
trading right at the highs of the range, and we assume the resistance will have
an impact on price, and we can assume this rising dollar index will have to
work really hard to keep rising higher.  So
if the dollar index is supposed to be rising, we need to see higher-highs before
we trust this heat map.  In my opinion,
this price SHOULD drop lower, but if it goes higher we know we have a lot of strength,
which tells us to keep selling retracements. 
So keep an eye out this morning on a falling dollar index after it tests
the resistance overhead.

    schooloftrade

    Click Here to Leave a Comment Below

    Leave a Reply: