June 4, 2012
- in Uncategorized by schooloftrade
Day trading strategy dollar index
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| Day trading strategy dollar index |
We take our time on a Monday morning without any major news
before 930am EST and also knowing the UK Queens Jubilee which will cause a
little bit of lower volume before we kick start the week. Our plan on a Monday is to have fun, get back
into the routine of the week, get the momentum behind us again, and remind
ourselves how we execute our plan. This morning
is all about getting back into the rhythm and taking the time we need to
prepare with our charts.
before 930am EST and also knowing the UK Queens Jubilee which will cause a
little bit of lower volume before we kick start the week. Our plan on a Monday is to have fun, get back
into the routine of the week, get the momentum behind us again, and remind
ourselves how we execute our plan. This morning
is all about getting back into the rhythm and taking the time we need to
prepare with our charts.
The dollar index has been trading at the highs of the rangefor the past few days and we can easily see this price action is telling us
clues for what the market personality is today.
We can see the double-bottom and AB=CD Pattern resistance both at 83.430
overhead and both of these held as major resistance as price was rising. Now the dollar index is moving sideways after
failing to break this resistance.
We can use a faster chart timeframe to find more details thatwill help determine what the short-term-trend is and the short term market
sentiment or market personality. Basically,
the slower charts show us WHERE to look for trading opportunities, and the
faster charts tell us exactly WHEN we should be trading. The 21 range chart shows us 2 bull price
channels and we can see that the market sentiment is trading sideways at the
lows of the longer term bull price channel.
With this short-term-trend being sideways we have threescenarios to consider and prepare for today.
The sooner we prepare for the dollar index the sooner we can move to our
markets we trade using the dollar index negative correlation. Price may move lower, and if we break below
the PLOD the sellers will take control and the price will try to drop. If we break above the PHOD the sellers will
have failed and the buyers will be in control, and if the price action trades
sideways then we know there is nobody in clear control and therefore we will
trade inside the range we are currently.
A rising dollar index tells us to sell retracements,
a falling dollar index tells us to buy pullbacks, and a sideways dollar index tells
us to trade within (inside) the sideways ranges we locate on the markets we
trade such as Crude Oil, E-Mini-Russell, euro, and gold futures. The sideways price wedge and the sluggish market
personality this morning is the biggest clue. We know that if the dollar index stays quiet
and sideways the rest of the markets will follow it, so we need to be patient
and wait for the dollar index to make new higher-highs or lower-lows and get
some SPEED in this market before we take our first trade this morning.
