May 22, 2012
- in Uncategorized by schooloftrade
Day trading strategy for dollar index
The dollar index is rising higherthis morning, giving us a +0.2% reading on the heat map. We open the 89-range chart and we see an
inside day, price wedge highs just overhead, the recent wave pattern and trigger-line
support below us, and we can see that the current candlestick wick is telling
us that this market is trading mostly sideways or lacking conviction in one
direction or the other.
The most important thing we seeon this is the ‘inside trading day’ above the PLOD and below the PHOD so we
know this price could go either higher, lower, or trade sideways. With those 3 scenarios we can prepare for all
three options.
We dig a little deeper using a
faster timeframe and we can see more details in the price action, such as the
lower highs and lower-lows along with the double-bottom resistance levels
overhead. We didn’t see this info on the
slower timeframe, which is why we use multiple timeframes.
faster timeframe and we can see more details in the price action, such as the
lower highs and lower-lows along with the double-bottom resistance levels
overhead. We didn’t see this info on the
slower timeframe, which is why we use multiple timeframes.
These clues we see from the dollar index; lower-lows, inside day, double-bottom resistance
all tell us that this price on the dollar index should move lower in the US
morning session. The high-percentage
trades when the dollar index moves lower is to buy using our wave-pattern
looking for pullbacks. This doesn’t guarantee
anything, but if the dollar index now moves lower we should be prepared to buy pullbacks.
