May 21, 2012
- in Uncategorized by schooloftrade
Day trading strategy dollar index
The dollar index has come off thehighs from late last week. If you recall,
we discussed that when the dollar index tested new higher-highs we would either
keep going higher, trade sideways, or reverse and come back down lower. The big issue this morning will be the support
from the trigger-line at the PLOD around the 81.00 area. We know this support may hold, and it does
price will go up to the PHOD and test the highs again. If the price trades sideways and flat on top
of the support and PLOD we can then sit on hands, stay patient and wait for the
market personality to increase. We can
also fail at this support and the price will drop below the PLOD and below the support
and price should move to the 80.480 level below us.
It’s
our jobs as professional traders to understand the three possible scenarios and
plan for them accordingly. Think about
the 3 directions that dollar index can move and how we will trade it
effectively. The faster timeframe
21-range chart shows us the clear bull price channel with the more recent
sideways trading range, and we know how to trade a sideways range, sell highs,
avoid middle, buy the lows, and this simple strategy works very well on the dollar
index. If the dollar index is in the
middle of this range we can assume everything will be sloppier and more
challenging on the markets we are trading.
