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Day trading strategy for dollar index correlation
morning at 800am EST shows the dollar index rising at +0.4 and we know that
tells us the high-percentage trades will be selling retracements this morning
unless something changes. We can see
from the 89range chart on the dollar index that we are on top of the BMT so we
assume price action will be a little bit sloppier than usual in this range, and
with the price wedge we know that the best trades will come when the dollar
index is at the highs or the lows.
The biggest concern we have this morning is that
the buyers failed above the PHOD which tells us the price should drop lower to
test the lows of the range. If the dollar
index moves lower that will reverse the heat map direction and will cause us to
lose our directional bias, so this ‘transition’ is likely, not guaranteed, but
very likely the dollar index will attempt to push lower. Another concern we have is the dollar index trading
sideways on top of the PHOD. We’ve seen
this so many times before, the dollar index cant move above the PHOD or PLOD and
instead it sits on top. When the dollar
index sits on top of the PHOD it tells us there is no confidence in the future
direction, and that lack of confidence will bleed over into the markets we trade
using this dollar index correlation.
