February 27, 2012

day trading strategy on the dollar index

Our main focus on a Monday morning is not jumping into new
trades, but to get back into the routine of the day, the week, and get that
confidence back that we may have lost over the weekend.

We’ve checked our hear maps and we can see the markets
overall are on the sideways and sluggish side, then we check the news and there’s
no major news before 930am EST on a Monday so this tells us once again to be
patient, get into the routine this morning, and the trades will come later
after 930am EST the US markets open.

We begin our week with a review of the day trading strategy on
the dollar index and this 89 range chart is one of our slowest timeframes and Ill
likely use these levels for the whole week in some way so I need to do this job
correctly the first time.

The 89 range chart helps us define the major levels of
support and resistance and we will use these levels as the most important areas
we will have all week, so keep an eye on the AB=CD reversal-zone below us as
support and the idea that we’re inside the trigger-zone from the lows to highs
so look for this support to hold, and if the support breaks with price moving
lower this is a big clue for rising prices.

We move to the faster 55 range chart, looking for the same
things on this timeframe as I did on the 89 range and even though we don’t see
a lot of new things, we do see this short term bear price channel, and this price
channel will provide us with resistance if price rises and support if price
falls.

We then move to the much-faster 13 range chart and this
chart timeframe has a specific job, to define the short term trend.  We already have the major s/r levels (turning
points) from the slower timeframes, but this chart is all about the trend.  Is there a short term trend today?  Yes we have a bullish short term trend.  A trend on the dollar index (as referenced on
the heat map inside the morning prep today) shows us an uptrend, which means we
can have a trading directional bias to the short side while this trend is
moving higher.  Remember this is the
SHORT term trend, so this can change quickly, and we will be watching this all
morning.

If the dollar index moves higher, we look to sell with the dollar
index correlation, and if it moves sideways we need to use that as a big clue
that other markets will stop loss trending as well.

Dollar Index Day Trading Strategy

    schooloftrade

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