April 24, 2012
- in Uncategorized by schooloftrade
Day trading strategy for dollar index correlation
First thing thismorning we check the dollar index for its market personality and its short-term-trend. We check the blog for the heat map at 730am EST
and we see the dollar index is FALLING at -0.2% which means we will use the dollar
index correlation as our directional bias.
With the dollar index falling, we will assume the high-percentage trades
will be buying pullbacks with new higher-highs.
We check the89-range chart and this shows us the medium-term bear price channel and the
bear price wedge that has formed in the short term. The price wedge, combined with the PHOD and PLOD
are the biggest clues on this chart. We
can see the price wedge highs and lows are right around the PHOD and PLOD which
tells me that when the market tests the highs it will also test the PHOD which
means EVERYONE will be watching that level.
This 89range price wedge is a big clue, and we know the high-percentage
trades will occur when the dollar index is at the highs or the lows of this price
wedge.
With the heat map telling us to buy pullbacks as
the dollar index falls, and the lows of the price wedge support right below our
current price at 830am EST we know this market may be ready to stall and sit
flat for a while. Do you think the -0.2%
could change to -0.1%? of course it can,
and when it does we need to assume the sellers having a hard time pushing lower
and this market will try to move higher.
