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The Ten Fundamental Objectives of the Federal ReserveIntroduction The Federal Reserve System, often referred to as "the Fed," was established in 1913 in response to a series of banking panics. As the central banking institution of the United States, it plays a crucial role in maintaining the stability and integrity of the nation's monetary and financial systems. This essay explores the ten fundamental objectives of the Federal Reserve, which include maintaining price stability, promoting full employment, and ensuring a stable financial system, among others. 1. Price Stability The primary objective of the Federal Reserve is to maintain price stability, which refers to a low and stable rate of inflation. By managing inflation, the Fed helps to preserve the purchasing power of money, ensuring that consumers and businesses can make informed decisions regarding spending, saving, and investment. 2. Maximum Sustainable Employment Another key objective of the Federal Reserve is to promote maximum sustainable employment, also known as full employment. This means providing enough job opportunities for all individuals who are willing and able to work, while minimizing the rate of unemployment. By promoting full employment, the Fed contributes to overall economic growth and well-being. 3. Moderate Long-Term Interest Rates The Federal Reserve aims to maintain moderate long-term interest rates, which are essential for economic growth and stability. By controlling short-term interest rates, the Fed can indirectly influence long-term rates, thereby encouraging borrowing, investment, and consumption. 4. Financial System Stability One of the most critical objectives of the Federal Reserve is ensuring the stability of the financial system, which involves monitoring and regulating financial institutions, as well as identifying and addressing potential risks. By maintaining a stable financial system, the Fed helps to prevent crises and protect the economy from shocks. 5. Efficient Payment and Settlement System The Federal Reserve is responsible for managing the nation's payment and settlement systems, which include check clearing, electronic funds transfers, and automated clearinghouse operations. By providing these services efficiently and securely, the Fed ensures that financial transactions occur smoothly, promoting confidence in the banking system. 6. Consumer Protection Another important objective of the Federal Reserve is to protect consumers by enforcing federal consumer protection laws and regulations. This includes monitoring financial institutions for compliance, addressing consumer complaints, and providing education and resources to help consumers make informed financial decisions. 7. Supervision and Regulation The Federal Reserve plays a vital role in supervising and regulating financial institutions to ensure their safety, soundness, and compliance with laws and regulations. This oversight helps to maintain a stable and resilient financial system, while also protecting consumers and investors. 8. Community Development The Federal Reserve is committed to promoting community development by supporting initiatives that address issues such as affordable housing, small business development, and workforce development. This objective aims to foster economic growth and improve the quality of life in communities across the country. 9. Economic Research and Analysis The Federal Reserve conducts extensive research and analysis to better understand the U.S. economy, as well as the global economy. This research informs the Fed's monetary policy decisions and helps it to fulfill its other objectives, such as promoting maximum employment and maintaining stable prices. 10. International Financial Cooperation Finally, the Federal Reserve cooperates with other central banks and international financial institutions to promote global economic stability and financial system resilience. This collaboration allows the Fed to share information, resources, and expertise, ultimately benefiting the U.S. economy. Conclusion The Federal Reserve plays a pivotal role in the U.S. economy by pursuing ten fundamental objectives, which range from maintaining price stability to promoting international financial cooperation. By fulfilling these objectives, the Fed ensures the stability and growth of the U.S. economy, while also fostering a resilient and efficient global financial system. Trade with care. If you like our content, please feel free to support our page with a like, comment & subscribe for future educational ideas and trading setups.
FRED:FEDFUNDSEducation
by financialflagship
11
What exactly is FOMC? What is FOMC, and what does it do? FOMC stands for Federal Open Market Committee. It's a group of people who work for the US government and makes decisions about the country's money. They decide how much money should be in circulation and how much it should cost to borrow money. How does FOMC affect the forex market? FOMC's decisions can affect the forex market because they can change the value of the US dollar compared to other currencies. For example, suppose FOMC raises interest rates. In that case, it can make the US dollar more attractive than other currencies, increasing the exchange rate. If they lower interest rates, it can make the US dollar less attractive, which can decrease the exchange rate. What is the FOMC statement, and why is it essential for the forex market? The FOMC statement is a document that FOMC releases after each meeting. It explains what the FOMC members talked about and what they decided to do with interest rates and the economy. This statement is essential for the forex market because it helps investors and traders decide what to do with their money. They might buy or sell different currencies based on the FOMC statement. How does FOMC affect currency exchange rates? FOMC can affect currency exchange rates by changing the value of the US dollar compared to other currencies. If FOMC raises interest rates, it can make the US dollar more attractive than other currencies, increasing the exchange rate. If they lower interest rates, it can make the US dollar less attractive, which can decrease the exchange rate. Why do traders pay attention to FOMC meetings? Traders pay attention to FOMC meetings and the FOMC statement because it can give them an idea of what might happen to the US dollar and other currencies. They might make trades based on what they think will happen after the FOMC meeting. For example, if they believe the FOMC will raise interest rates, they might buy US dollars because they think the exchange rate will increase. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
TVC:DXYEducation
by OlympusLab
How FED / ECB Interest rates set trendsWatch how interest rates decisions set trends in EURUSD and Dollar Index impacting the entire forex market. I marked all the previous interest hike decisions by FED and ECB. 2023 EURUSD bullish reversal was triggerred by ECB starting to raise iterest rates (after EUR hit the alarming 1.00 level). EUR might continue bullish until next tow hikes. From what I read ECB does not plan to hike rates for the rest of the year after May meeting (rates will stay at 4), so it is likely to trigger bearish reversal from May. Likelwise, 2020 EUR bullish ride (and dollar weakness) was triggerred by FED lowering interest rates (in March 2020) after COVID hit. FOR EDUCATIONAL PURPOSES ONLY. Good luck in your trading! God bless!
Education
by ICFX
💲Learn DXY - US. Dollar Index ✅Why Be Interested? The strong dollar has been getting a lot of attention lately. Some U.S. companies are blaming the strong U.S. dollar for lackluster earnings, while economists say it's helping the Federal Reserve’s ongoing fight against high inflation. But how do you know when the dollar is strong or weak? That’s the job of the U.S. Dollar Index (DXY) ☑️What Is the U.S. Dollar Index? The U.S. Dollar Index is a market index benchmark used to measure the value of the U.S. dollar relative to other widely-traded international currencies. The Federal Reserve established the dollar index in 1973 to track the value of the U.S. dollar. Two years earlier, President Richard Nixon had abandoned the gold standard, which allowed the value of the dollar to float freely in foreign exchange (forex) markets. Since 1985, the dollar index has been calculated and maintained by Intercontinental Exchange (ICE). ☑️The Dollar Index History and Makeup The formula for calculating the value of the U.S. Dollar Index includes the dollar’s relative value compared to a basket of foreign currencies. Initially, it included the Japanese yen, British pound, Canadian dollar, Swedish krona, Swiss franc, West German mark, French franc, Italian lira, Dutch guilder, and Belgian franc. Following the creation of the euro in 1999, the number of currencies was reduced and the formula for the dollar index was adjusted. Today, the basket includes just six currencies: the euro (EUR), Japanese yen (JPY), British pound (GBP), Canadian dollar (CAD), Swedish krona (SEK) and Swiss franc (CHF). ✅How Is the U.S. Dollar Index Used? The USDX allows traders and investors to monitor the purchasing power of the U.S. dollar relative to the six currencies included into the index's basket. Investors also use the dollar index as a litmus test for U.S. economic performance, particularly when it comes to imports and exports. The more goods the U.S. exports, the more international demand there is for U.S. dollars to purchase those goods. When demand for the dollar is high, USDX rises. ☑️Dollar Index Shortcomings: The weightings of the currencies used to calculate the index were based on the United States’ biggest trading partners in the 1970s. As a result, its calculation doesn't include emerging market currencies, like the Mexican Peso (MXN) or commodity currencies. It also doesn't include China’s renminbi (CNY), even though China is now the largest U.S. trading partner by a wide margin. Therefore, the index may be less useful as an economic measure than in previous decades. ✅What Makes the U.S. Dollar Strong? A combination of higher inflation, the Fed's aggressive tightening campaign and a global search for yield have all contributed to the strong dollar. A strong dollar means other global currencies have been relatively weak, which exacerbates inflationary pressures and financial market volatility. 📍In Conclusion: The Dollar Index can be used as a gauge of the Dollar strength or weakness, and it’s futures can be used to profit form Dollar moves without betting on any individual Dollar currency pair which provides diversification. However, the Index is somewhat outdated which needs to be accounted for when using it. Please, support our work with like & comment! What do you want to learn in the next post?
OANDA:XAUUSDEducation
by UnitedSignals
4
WHAT IS A PIP AND HOW TO MEASURE IT?WHAT IS A PIP? The pips is the unit with which we measure the price movement of a pair. Example: If the USD/MXN pair is used. If the dollar is worth 20.7 and rises to 20.8, it is said to rise to 1 cent but in FOREX it is not measured with cents, it is measured with pips. The price of the USD/MXN chart has 3 extra decimal places 20.8 000 those 3 extra decimal places are what the pips are measured with: the pip is the fourth number after the point . If the price changes from 20.8100 to 20.80101 the price moves 1 pips, if the price moves from 20.80100 to 20.80110 the price moves 10 pips and if the price moves from 20.80100 to 20.80300 the price moves 200 pips. Pips are calculated differently depending on the pair, pairs with Japanese YEN and pairs WITHOUT Japanese YEN PAIRS WITH YEN
Education
by Ed_Ale
2
November FOMC preview – where the risk to markets resides Time – 3 Nov 5am AEDT / 6PM GMT (Jay Powell speaks at 05:30 AEDT) Central bank meetings are just so important to sentiment and market structure – when we’re trading a major market theme, such as inflation and rising interest rates, this is the market’s chance to mark-to-market policy changes and how the collective in the bank guide our expectations for future meetings ahead. For traders, notably for those who have exposures sensitive to policy changes, they simply must assess the potential for big volatility, which could affect their positions – our job is to recognise the propensity for sizeable movement, the skew in the outcome distribution and if our stop placement is too close/far from the market. Do we reduce, exit or in some cases even initiate positions? For others, the central bank meeting will shape the trading environment and the market structure they work in - not just for that trading session, but for the following days ahead. Consider day traders who work within a specific timeframe and need to assess if price action constitutes a trending day, and therefore they look more closely at momentum strategies. Or is it more of a choppy, sideways, range-bound day, and therefore looking more readily at intra-day mean reversion strategies? ‘Environment recognition’ is key for day traders and scalpers and edge comes from being able to identify the regime we’re in – perhaps through the application of market profile, VWAP, Bollinger Band strategies (to name a few), as well as good old fashion price action. An overview of the November FOMC meeting As we know event risk seldom gets more important than an FOMC meeting, so this is a risk we need to manage. Trading these tier 1 events takes skill like no other – we must react to the statement, but then 30 minutes later we react to individual words and nuance in the press conference from chair Jay Powell. It’s always the high frequency algo’s that recognise the keywords first and we mortals are left trying to react according. Even once the presser has finished and the dust has settled, quite often we see the ensuing Fed members speaking over the coming week giving their own personal view, and often when we’ve seen violent moves on the day, they will walk back any extreme reaction. The first move is not always the right move. To some, this lively backdrop, especially when we consider reduced liquidity can be nirvana-type conditions. To others, this is the environment where they have no edge and see it best to stand aside and let price do its thing. A hawkish ‘step down’ on the cards We’ve been treated to a roller coaster in Fed ‘pivot’ expectations - Ranging from a WSJ article of an impending ‘step down’ in the pace of hikes starting at the December meeting. To dovish turns from the RBA, ECB and BoC – however, the Fed are their own boss and they see US labour market data that has been solid (as donated by the Employment Cost Index and JOLTS report) – US 5-year inflation expectations are rising and next week’s US core CPI print will likely be close to unchanged at 6.6% YoY - it seems highly unlikely that the Fed will want to promote a positive reaction in risky assets, and the risks to markets in my mind are skewed to a hawkish reaction – equity up, bond yields and the USD lower. In the Fed’s view, putting the US into a recession is still a lesser evil than not tackling entrenched price pressures. While traders would fall off their chair if the Fed didn’t hike by 75bp at this meeting, it’s the guidance for future meetings which is where we get a reaction in markets. We are likely to hear that the pace of hikes in the future will fall to a more conventional pace – this is the ‘step down’ many have focused on. But this narrative will be accompanied by strong conditionality, and the statement will be about giving the Fed maximum flexibility and optionality for the December meeting – that call will be fully data-dependent. So, consider there is a lot of information between now and the 14 December FOMC meeting – we have 2 non-farm payrolls reports, the Oct CPI print (11 Oct) and the midterm elections. It’s no wonder the market is pricing 62bp of hikes for that meeting and hedging their bets of a 50 or 75bp hike – it's this pricing for the Dec FOMC meeting which I think is key for markets. Rates Review – we see market pricing for the Nov FOMC meeting at 75bp – then a step to 62bp in the Dec meeting. The holy trinity – the three markets to drive cross-asset volatility Pricing for the December FOMC meeting So part of the reaction will be seen in the pricing for the Dec FOMC meeting which currently sits at 4.41% – traders can see this on TradingView by typing ‘100-ZQF2023’ into the navigator. A dovish reaction would be to see this headed below 4.4%, where we would expect the USD to sell off and gold and equities to rally. A push towards 4.50% would see USDJPY push towards 150 and EURUSD through 0.9800. Terminal fed funds rates pricing We also look at the terminal rates pricing – this is the peak of market expectations for where the Fed can take rates, which currently sit in the May to June 2023 period at 5% – we can type in ‘100-ZQK2023’ into the navigator. A firm break above 5% would send risk lower. US 2-year Treasury I also look at US real rates and 2yr Treasuries (US02Y) closely as a driver for risk assets – If yields rise then we should see the NAS100 and gold fall and the USD spike, especially if we take out the 21 Oct high of 4.63% – conversely if yields fall/price rise then the USD will likely fall. As always around key events, the reaction in markets is a function of: • The outcome vs Expectations • Positioning • Hedging activity • Liquidity My own view is the risks are skewed for a hawkish reaction – USD higher, but I will recognise the moves in rates suggests the market is largely positioned for this outcome.
PEPPERSTONE:USDXEducation
by Pepperstone
2
Trading Psychology (Part 1)A philosophy I engage in when trading the markets - I am not self-employed as a trader. - The market is my boss and my trades are my employees. - I merely manage those employees. Traders often have to think fast and make quick decisions, darting in and out of positions on short notice. To accomplish this, you need a certain presence of mind. You need the discipline to stick with your own trading plans and know when to book profits and losses. Emotions simply can't get in the way. It’s NOT that winning traders formulate better trading strategies It’s NOT that winning traders are smarter It’s NOT that winning traders do better market analysis One personal characteristic that almost all winning traders share is that of self-confidence . Winning traders possess a firm, basic belief in their ability to BE winning traders.
OANDA:XAUUSDEducation
by JinDao_Tai
GOLD MTF Wave stochastic example for trend reverseSometimes you don't need to count all of the Elliott Waves and pinpointing where the last Impulse started is enough to located the proper Time frame to look for that wave ending on the MTF. in this case the 1 month chart was the relative Time frame for the last impulse upwards (see where I wrote MTF stoch wave start) and you can see that from the Stoch being oversold on all time frames. then notice how the green (HTF) starts curving down at the end with a tap from blue and gray as a potential local top to exit at.. this is often all you need to trade a simple wave without too much complication. Please do not hesitate to ask any questions
TVC:GOLDEducation
by cryptoheat
GOVERNMENT BONDS YIELD. INVERTED CURVEWhat are GOVERNMENT BONDS YIELD? Bonds are Fixed Income instruments that allow investors to anticipate the flow of funds they will receive. What does an inverted yield curve mean? Put simply, this means that short-term US debt is more profitable than long-term debt. Economic theory says that in a “normal” situation, long-term lending should be more profitable than short-term lending. An inverted yield curve occurs when the yield on short-term bonds (US03MY, US06MY, US01Y) is greater than the yield on longer-term bonds (US30Y, US20Y) . This is bad for the economy and worse if it is the United States because it means that they are relying on the economy in the short term since the "normal" thing is that long-term bonds give better yields. Some economists and analysts see in this situation an indicator that a next economic crisis is coming, either in the form of a slowdown in GDP or even a recession.
TVC:US30YEducation
by Ed_Ale
🌐What Is the U.S. Dollar Index❓ ✅Why Be Interested? The strong dollar has been getting a lot of attention lately. Some U.S. companies are blaming the strong U.S. dollar for lackluster earnings, while economists say it's helping the Federal Reserve’s ongoing fight against high inflation. But how do you know when the dollar is strong or weak? That’s the job of the U.S. Dollar Index (DXY) ☑️What Is the U.S. Dollar Index? The U.S. Dollar Index is a market index benchmark used to measure the value of the U.S. dollar relative to other widely-traded international currencies. The Federal Reserve established the dollar index in 1973 to track the value of the U.S. dollar. Two years earlier, President Richard Nixon had abandoned the gold standard, which allowed the value of the dollar to float freely in foreign exchange (forex) markets. Since 1985, the dollar index has been calculated and maintained by Intercontinental Exchange (ICE). ☑️The Dollar Index History and Makeup The formula for calculating the value of the U.S. Dollar Index includes the dollar’s relative value compared to a basket of foreign currencies. Initially, it included the Japanese yen, British pound, Canadian dollar, Swedish krona, Swiss franc, West German mark, French franc, Italian lira, Dutch guilder, and Belgian franc. Following the creation of the euro in 1999, the number of currencies was reduced and the formula for the dollar index was adjusted. Today, the basket includes just six currencies: the euro (EUR), Japanese yen (JPY), British pound (GBP), Canadian dollar (CAD), Swedish krona (SEK) and Swiss franc (CHF). ✅How Is the U.S. Dollar Index Used? The USDX allows traders and investors to monitor the purchasing power of the U.S. dollar relative to the six currencies included into the index's basket. Investors also use the dollar index as a litmus test for U.S. economic performance, particularly when it comes to imports and exports. The more goods the U.S. exports, the more international demand there is for U.S. dollars to purchase those goods. When demand for the dollar is high, USDX rises. ☑️Dollar Index Shortcomings: The weightings of the currencies used to calculate the index were based on the United States’ biggest trading partners in the 1970s. As a result, its calculation doesn't include emerging market currencies, like the Mexican Peso (MXN) or commodity currencies. It also doesn't include China’s renminbi (CNY), even though China is now the largest U.S. trading partner by a wide margin. Therefore, the index may be less useful as an economic measure than in previous decades. ✅What Makes the U.S. Dollar Strong? A combination of higher inflation, the Fed's aggressive tightening campaign and a global search for yield have all contributed to the strong dollar. A strong dollar means other global currencies have been relatively weak, which exacerbates inflationary pressures and financial market volatility. 📍In Conclusion: The Dollar Index can be used as a gauge of the Dollar strength or weakness, and it’s futures can be used to profit form Dollar moves without betting on any individual Dollar currency pair which provides diversification. However, the Index is somewhat outdated which needs to be accounted for when using it. Your Like and Comment are the best Thank You😊
Education
by ProSignalsFx
4
🔥The LAST hope for crypto: why DXY may pump BTC soon❓Hi friends! This educational idea about the dollar index and entire crypto market will be really usefull for the beginners and the experienced traders also. I`ll explain you several fundamental and technical reasons why and when BTC ans other crpyto will start rise. You can also use it in your trading to identify the global trend and open more succesfull trades. As far as you may know, ✅the stronger the dollar index (DXY) the weaker all global assets and vice versa. This means that when the index rises, most stocks, cryptocurrencies fall. When the index falls the most assets grow very fast, especially such volatile ones as 🔥crypto: Bitcoin, altcoins and 🔥shares of technology companies: Tesla, Meta, Apple, etc. But when actually BTC and other crypto will start it's rise and you can open your best long trades❓ I explain you this in the both chapters about fundamental and technical analysis. ✅ Fundamental analysis Now the dollar index is strengthening amid the Fed rate hike. This means that we have to wait until the trend reverses and the dollar index starts to fall. After that BTC and altcoins might start it`s new BULL MARKET. 📊 When the dollar index (DXY) starts to fall? The dollar has strengthened significantly against other currencies in the world (pound, euro etc.). This is caused by the latest rate hike to 3.25% and expectations for an increase to 4.4-4.75% by the end of 2022. The stats for traders who want to understand how the growth of dollar index (DXY) affects other assets and currencies: 🚩The Euro is at 20 year lows. 🚩The Yen is at 24 year lows. 🚩The Pound is at 37 year lows. 📊 Do not be surprised that Bitcoin fell so much🔥, because according to the latest data, even the institutionals (big players) also scared and opened the biggest hedge positions since 2008. 🚩 It can be assumed that from the end of 2022 or early 2023 we can see a global reversal of ALL markets, including crypto depends on FEDs rate hicking end. ✅ Technical analysis 📊 14 year channel on DXY Pay attention to point #4 on the dollar index chart. This is where the global uptrend for DXY and global downtrend for BTC began. The strongest dependence! 📊 When to open a long trade on Bitcoin❓ The end of the rate hike by the end of 2022 coincides with the technical analysis on the dollar index chart. The index is now at point #5, which is the upper boundary of the channel and the srongest resistance for the dollar index. It is worth adding that this is not just a channel on the 5 min chart, which globally has no significance. This is a huge 14 year channel (‼️) on the weekly chart, which the price will test for the 5th time! This is a powerful signal for a reversal and resistance for the price. 🚩 The higher the timeframe, the more traders see it and, accordingly, the greater the price reaction on it. Montly>Weekly>Daily>4h>1h>... 🔥We can expect the index to fall from point #5 or at least partially consolidate at these levels before falling, as it was back in 2017 (or point #3). This can pull the price assest including BTC and altcoin to the new ATH. 📊 BTC global bottoms. In addition, the reversal of the dollar index coincides with the formation of Bitcoin's global bottom. Bitcoin began 3/4 of its bull markets with consolidation at the bottom, which is happening now. 🚩 Of course, local manipulations with the collection of liquidity below $17,000 are very likely, but even now you can start to look for a good entry point in the trend reversal. For example, it may be the pattern of higher lows and higher highs, which is characteristic of a bullish trend. ✅ I use much more advanced trading systems to identify the best entry points and open trades either short or long, about which I write my ideas on TradingView, but this pattern will definitely help both beginner and experienced trader to earn more. Traders, will you use this analysis in your trading❓ When exactly do you expect the global bottom on Bitcoin❓ Let's discuss it in the comments. 💻Friends, press the "boost"🚀 button, write comments and share with your friends - it will be the best THANK YOU. P.S. Personally, I open an entry if the price shows it according to my strategy. Always do your analysis before making a trade.
Education
by Yuriy_Bishko
22
🔍Studying horizontal volumes🤔🔍Volumes are one of the most useful tools on the market, That gives the most objective information about the alignment of forces between buyers and sellers (with qualitative analysis, of course). It is necessary to learn how to correctly interpret volumes ( volume analysis) and the trader gets a powerful tool at his disposal. Add to this risk management and money management (without this, you will never succeed in the market) and get one of the most profitable strategies. There are two types of volume: horizontal and vertical. And in this eduaction idea, we will get a little acquainted with horizontal volumes. 🧐 What is it? Horizontal volumes are a histogram based on the number of trades made at a price level. Unlike vertical volumes, that tells us about the volume traded for the set time period, horizontal volumes show the volume traded at the price level. This tool will allow to identify highly probable reversals, as well as areas of support and resistance . Thanks to TradingView, everyone can use the horizontal volume indicator for free. Thank you so much🙌 📊 Horizontal volume indicator includes: ➡️ Value Zone/Area ➡️ VAH (value area high) ➡️POC (point of control) ➡️ VAL (value area low) All of the above can be seen on the graph (marked on the graph above). The Value Zone/Area is the so-called "body" of the histogram for the selected period and is formed in the place where 70% (by default) of the total volume has passed. 🟡 VAH (value area high) is the top line of the value area. The upper line of the value zone can play the role of resistance and support. 🔴 VAL (value area low) is the bottom line of the value area. Formed where volumes are declining. The lower line of the VAL value zone can also play the role of resistance and support. You need to be very careful when the price approaches VAH and VAL❗️ 🔵 POC (Point of Control) is the most important level. It is a support or resistance zone depending on where the price is above or below the POC. As long as the crowd has not formed an imbalance in the POC area, the price will move either higher or lower than the POC. At this time, it is better not to trade, and let the price decide, entering from a re-test of the formed balance. 📈 How to trade? Remember that everything needs experience! You will need time to develop your strategy based on horizontal volumes or to include this tool in your existing arsenal. Analysis, observation and again analysis! Pay special attention to POC, this level is the most important and interesting in terms of opening a position. Here you should pay attention to the weekly POC and intraday. On the charts above, you can see trades in Gold ( XAUUSD ) and Silver ( XAGUSD ) that were opened exactly from the POC week (previous). You can observe the results yourself. Of course, there are also losing trades, but with the observance of risk management and a systematic risk/reward ratio, success is guaranteed. 🔴 Conclusion Horizontal volumes will help identify (but more confirm) support and resistance levels/areas. Near VAH, VAL and POC, one should be as careful as possible, as this is a good opportunity for a probable entry into a trade. We can call it a "creative process": you will definitely see and form many entry and strategy opportunities based on this. 😉 Thank you for reading and profitable trades ❗️
OANDA:XAGUSDEducation
by ALIEV-FX
7
How to Use Log ScaleIn this post, I will explain how traders can maximize their use of log scale on Trading View. I will give examples of when you should use log scale on your charts and when you should not, as well as provide an in-depth analysis of its use cases, including how you can actually visualize the entire lifecycle of an asset using the log scale. In the chart above, I highlight the difference that using the wrong scale can have on your trading. The chart shows the monthly candlesticks for the U.S. Dollar Index (DXY). If one applied Fibonacci levels on a log adjusted version of the chart, one would have been under the impression that the dollar index made a huge breakout above its Fibonacci level. However, if one had not applied log adjustment, one would have correctly noticed that price was actually being resisted by the Fibonacci level. From a mathematical perspective, the U.S. dollar index ordinarily should not be log adjusted. I'll explain why below. Log adjustment simply refers to adjusting data on a logarithmic scale. Log adjustment is most suitable for visualizing data of a financial instrument or asset that is moving exponentially or in logistic growth . I will explain and illustrate both of these patterns below, but before I do so, I will discuss assets that do not move in either of these two ways and therefore should not be log adjusted. Financial instruments that are range-bound or that oscillate up and down (e.g. the VIX), ordinarily, should not be log adjusted. Similarly, financial instruments that oscillate relative to another financial instrument, such as the U.S. dollar index (the dollar index oscillates relative to the strength of other currencies), should ordinarily not be log adjusted. Additionally, financial instruments that oscillate up or down solely due to monetary policy action, such as bonds and interest rates, ordinarily, should not be log-adjusted. In all of these oscillator examples, price action does not undergo exponential decay or logistic growth relative to time and therefore log adjustment is mostly inappropriate. Applying log scale to these assets can lead to the trader reaching the wrong conclusion, such as shown with the dollar index example above, and below with an example from the VIX. Regardless of which one of these charts ultimately proves to be right (support holding or breaking for the VIX) it illustrates the problem with using the wrong scale on your charts. Using the wrong scale can lead to the wrong conclusion and put you on the wrong side of a trade. On the other hand, most other financial instruments and assets move in patterns of either exponential decay or logistic growth and should be log adjusted. Most stocks, indices, derivatives, and cryptocurrencies move in patterns that should be log adjusted. Here's an example of exponential decay : Here's an example of logistic growth : Many people look at this chart and incorrectly think that Monster Beverage (MNST) is growing exponentially, but in fact it is not. Applying log adjustment can help show this. As you can see, log adjustment shows that MNST's past price action fits the S-curve of a logistic function almost perfectly. If MNST were growing exponentially, log adjustment would just show a straight line with an upward slope. In the above example, log adjustment can actually show you hints that MNST is in the late phase of its growth cycle as price reaches capacity. As far as I am aware, no financial asset grows exponentially, as there is a finite amount of capital and a finite amount of resources in the world. When a financial instrument appears to be growing exponentially, it is merely in the upward concavity phase/maximum growth period of a logistic function. Eventually, the financial instrument will reach its capacity and its growth will begin to flatten over time. In virtually all cases, assets decline at some point in the future after reaching their capacity. Using log adjustments can help you avoid entering into positions of assets that are near capacity. Log adjustment reveals where an asset is currently positioned in its lifecycle. Take a look at the below example of Citigroup. When the Great Recession hit, Citigroup began to undergo exponential decay (relative to the broader market). See the chart of Citigroup's price action relative to the broader market (S&P 500). In some rare cases, an asset can do the opposite of this: transition from exponential decay to logistic growth. Finding and entering a position just before the inflection point can be among the most lucrative investments one can possibly make in the financial markets. Log adjustment can help you find the inflection point. In the future, I will write a post on how to find inflection points using log adjustment, and I will provide an example of an asset that is about to break out from its inflection point. Aside from visualizing the lifecycle of a financial asset, log adjustment can help eliminate skewness to better visualize patterns. Here's an example below. Log adjustment also allows us to run linear-log regressions. In short, a linear log regression can identify areas where price action is unusually above or below the mean for financial instruments that move up or down exponentially. In the chart above, we see a log-adjusted chart of Money Supply (M2SL). Applying log adjustment to the money supply and then adding a linear-log regression channel shows us that the Federal Reserve was clearly adding too much money into circulation as evident by the M2SL reaching an abnormally high standard deviation from the mean and jumping above the upper line of the regression channel. Log scales help us understand and visualize data about the world around us and the natural cycles which characterize it. Log scales and logistic growth are used in many other scientific contexts from epidemiology (e.g. tracking the spread of a virus) to demography (e.g. analyzing population growth and decline). Take a look at a log scale of Japan's Nikkei Stock Average alongside the country's population from the post-World War II era to the present day. In summary, applying log adjustment is ordinarily suitable for assets that move exponentially or in logistic growth. Applying log adjustment on the price action of an asset that moves in this manner can better help us eliminate skewness, identify abnormal deviations using linear-log regression, and allow us to visualize the lifecycle of a financial asset. Note: Sometimes the wrong scale can be useful in trading because so many other traders are also making the same error and basing their trades on the wrong scale. I've seen this happen quite frequently for Fibonacci retracements. So sometimes it can be helpful to toggle between log scale on and off to see which is causing a price reaction. In general, though, log adjustment is mostly suitable for assets moving in exponential decay or logistic growth, from a mathematical perspective.
TVC:DXYEducation
by SpyMasterTrades
17
🔍What you need to know about the DXY index🤔🔍 DXY INDEX (USDX) displays the value of USD against a basket of six foreign currencies: EUR, JPY, GBP, CAD, SEK, CHF. This index is calculated on the basis of the weighted average ratio of USD to six currencies. ➡️ EUR —> 57,6% ➡️ JPY —> 13,6% ➡️ GBP —> 11,9% ➡️ CAD —> 9,1% ➡️ SEK —> 4,2% ➡️ CHF —> 3,6% ➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖ ❗️ Interesting note ❗️ Given the fact that the EUR is included in the DXY (the largest weight in the index, so it is not surprising that the DXY and EURUSD are highly correlated), the dollar index is the currency of the member countries of the EUR zone. ➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖ The index was created by JPMorgan Chase, which officially released this trading instrument to the market in 1973. The level of 100 was taken as the base value. The index was not subject to any changes, except for the introduction of EUR in Europe. DXY allows you to form an idea of ​​the value of the USD and its weight in the world. In addition, this index may signal a recession in the world: the rapid growth of DXY indicates that market participants prefer to withdraw their investments in cash, i.e. in USD, and in moments of economic instability, buy US bonds with these USD. 🔴 Thus, the index is used as a separate speculative trading instrument in the market, and also serves as an indicator that allows you to determine current financial trends.
TVC:DXYEducation
by ALIEV-FX
4
📌The ‘Dollar Smile Theory’🙂 🤑 Introduction The U.S. Dollar Smile Theory is a popular notion that illustrates that the U.S. Dollar stays positive in good as well as bad market conditions. This theory was created by a former economist and strategist Morgan Stanley, and it became popular in 2007. This was the time when the U.S. dollar witnessed a significant boost amidst the global recession. Many times, looking at the market conditions, people would think the U.S. dollar would fall, but surprisingly it continues to grow. Why does that happen? The Dollar Smile Theory answers this question. Following are the three scenarios that Morgan Stanley put forward to explain the positive growth of the U.S. Dollar. The Strength Due To Risk Aversion The first reason that the U.S. dollar rise is due to risk aversion. This is a situation where investors rely more on safe-haven currencies such as the dollar, yen, etc. During this period, investors consider the global economy in an unstable position. Hence, they are less likely to invest in the risky asset; instead, they put their cash on U.S. dollars. The Dollar Weakens to New Low – Economic Recession and Slowdown Under this scenario, the US dollar falls to a new low. The bottom of the smile indicates the dull performance of the currency as the economy struggles with weak fundamentals. Additionally, the possibility of falling interest rates also impacts the position of the U.S. Dollar. This results in the market participants steering clear from the dollar. Subsequently, the primary motto of the U.S. Dollar becomes to Sell. Investors move from buying the currency to selling it and moving towards currencies that are providing higher yields. The Strength Of The U.S. Economy Helps The U.S. dollar continues to grow because of the strong economy of the country. After the low, a new smile emerges as the economy sees its light at the end of the tunnel. With the signs of the recovery of the economy, a sense of optimism spreads through the market. This increases the sentiments towards the dollar again. With the US economy enjoying higher GDP growth, the greenback continues to appreciate. This increases the interest rate in the international market. Let’s take a look at the Dollar Smile Theory in reality… As you can see, due to the global pandemic which has caused a lot of economies all over the world to suffer, the U.S. dollar is acting as a safe haven currency. All countries, including the U.S., aren’t doing so great. The key is relative economic growth. If growth from other countries is growing, but the U.S. economy is growing even faster, then the U.S. dollar will swing upward to the right side. So will the Dollar Smile Theory hold true? Only time will tell! Though the theory is quite relevant and backed by some logic, the economy is extremely volatile. So only time will tell how definite the Dollar Smile theory is in the future. In any case, this is an important theory to keep in mind. Remember, all economies are cyclical. They strengthen, then they weaken, they strengthen, then they weaken, and repeat. The key part is determining which part of the cycle the U.S. economy and then compare how it’s doing against the rest of the world . sources:forex.academy .babypips.com this article is For information purposes only!
TVC:DXYEducation
by PRO_SMART_Trader
The Four Quadrants of the Economic CycleUse this as tailwinds for your trading and investments to spot the capital inflows when the time comes. I would say we are likely in the inflationary bust stage (1) coming out of the disinflationary boom stage (4) for the last decade and beyond. I would dare say the Inflationary bust stage is next (2) as the central banks try to kill inflation by raising rates and destroying asset prices. To fix the economic damage they would have to eventually change their monetary policy which would then bring us into an inflationary boom (3) The cycle repeats over and over but I'm positioning for the Inflationary boom stage (3) as I believe this stage will last many years.
TVC:TNXEducation
by AxeCapp
31
Learn What is U.S. Dollar Index (DXY) 💵💲 Hey traders, I share my analysis, signals and forecasts on Dollar Index occasionally. Quite often I receive questions from you asking me to explain what exactly that index means and why it is so important. Dollar Index (DXY) is a measure of the value of the United States Dollar against a weighted basket of major currencies. This basket consists of 6 following currencies: 🇪🇺Euro (EUR) - 57.6% share 🇯🇵Japanese yen (JPY) - 13.6% share 🇬🇧Pound sterling (GBP) - 11.9% share 🇨🇦Canadian dollar (CAD) - 9.1% share 🇸🇪Swedish krona (SEK) - 4.2% share 🇨🇭Swiss franc (CHF) - 3.6% share The selection of the following basket of currencies and their weight is determined by the significance of a trading partnership between the countries. The index value is calculated with the formula: USDX = 50.14348112 × EURUSD ^ -0.576 × USDJPY ^ 0.136 × GBPUSD ^ -0.119 × USDCAD ^ 0.091 × USDSEK ^ 0.042 × USDCHF ^ 0.036 The index was launched in 1973 and had an initial value of 100. When the U.S.D is gaining strength against the above-mentioned currencies, the index is growing, while its weakness against them leads to a decline of the index value. To conclude, the Dollar Index reflects a fair value of the Dollar and its dominance in global markets. Its analysis may help to make more accurate predictions of the future direction of the dollar related instruments. Do you analyze DXY? ❤️If you have any questions, please, ask me in the comment section. Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
12
How To Analyze Any Chart From Scratch - Episode 4Hello TradingView Family / Fellow Traders. This is Richard, as known as theSignalyst. Today we are going to go over a practical example on US100, but you can apply the same logic / strategy on any instrument. Feel free to ask questions or request any instrument for the next episode. You can find the previous two episodes below "Related Ideas" Always follow your trading plan regarding entry, risk management, and trade management. Good luck! All Strategies Are Good; If Managed Properly! ~Rich
UEducation
by TheSignalyst
13
How To Spot Economical Cycles Top Using [DXY- SPX and VIX] Hi Everyone In this video I want to share an overview of the importance of economic cycles for traders and investors and how we can use Trading View charts with no indicators to figure out key economic signals on the following charts: DXY tops for the end of previous bear markets VIX normal ranges vs Bear cycles ranges The Dow Jones Industrial average is another key chart with SPY charts because everyone has a 401K retirement account these days and people are use to the headlines of the Dow Jones Industrial Average new highs and new lows to shift emotionally between despair and exuberance. It's not unusual for people to throw in the towel just as the market begins to rise in the next economic cycle. As a student of the markets, you need to know when it's time to load up on bargain priced assets and ride the next cycle up and when it is time to slowly sell or fade into the tops of the markets and avoid the downturns. Are we in a normal healthy correction 10-20% or are we heading toward the Great Depression type 50% correction from the top? These charts will help you answer the question. Mastering the market and economic cycles is the key to becoming wealthy in all asset classes - Stocks, Real Estate, and Cryptos Hope it helps... @Marc
CAPITALCOM:DXYEducation
by PowerIndicators
7
Dollar IndexHello everyone! There are many tools on the market to understand the general state of the economy or the company. As a rule, indexes are responsible for this. And today we will discuss the Dollar Index. A little history In 1973, the dollar Index (DXY) was invented and first introduced by JP Morgan. Level 100 is the base value of the index. If the instrument shows, for example, a value of 110, it means that the dollar has grown by 10% relative to the base value. As you may remember, in March 1973, the largest countries in the world introduced a floating exchange rate – this date was the beginning of the index. About the index With the help of the dollar index, analysts determine the strength of the dollar as a whole. This is a very simple analysis tool that almost every analyst uses and shows the index how strong or weak the dollar is relative to other world currencies. Method of calculating the dollar index The index consists of weighted components of the following currencies: euro (57.5%), Japanese yen (13.6%), British pound sterling (11.9%), Canadian dollar (9.1%), Swedish krona (4.2%) and Swiss franc (3.6%). As you can see, the currencies with which the dollar is compared are European countries, which is why DXY is called an "anti-European" index. Based on the number of currencies in the index, people believe that the US is compared with six European countries, which is incorrect, since the euro is officially the currency of 19 EU countries: Austria, Belgium, Germany, Greece, Ireland, Spain, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, Finland, France, Estonia. Add to this 5 more countries — Japan, Great Britain, Canada, Sweden and Switzerland and we get almost the entire civilized world. Although all countries are united by one currency, their economies are still different and therefore each currency of a separate country has a corresponding weight in the index. Dollar Smile One of the Morgan Stanley analysts noticed an interesting feature of the dollar – the dollar can strengthen in both bad and good economic conditions. This analyst was Stephen Jen and it was he who came up with the "dollar smile theory", the essence of which is that the dollar adheres to three scenarios: 1. "safe harbor" - investors believe that the economy is experiencing difficulties, so everyone is investing in less risky dollar assets. 2. When the US economy is weak, the dollar falls. The fall is strongly influenced by interest rates, as a result, everyone gets rid of the dollar, and the smile becomes wider. 3. Perhaps the easiest period to understand is the growth of the dollar due to the economic growth of the United States. People increasingly believe in the country and the currency, which contributes to a greater growth of the dollar. Thanks to this theory, it is easier to understand the market situation in general and the cyclical nature of the market. How to use the index The index is usually used to analyze currency pairs. The index helps to determine the relative strength of the currency relative to the dollar, at those moments when you trade currencies in which there is USD, for example, EURUSD, GBPUSD, USDCHF, etc. The index is also used to find discrepancies. If DXY falls and the dollar weakens, then you will see growth on the GBPUSD chart. If the dollar is the base currency, for example, USDJPY, then the index and the currency pair will move in the same direction. Often you will notice that the dollar index is growing, and the currency pair is standing still – this is the discrepancy, which is very profitable for an observant analyst. In addition to correlation with currency pairs, DXY correlates with oil. The fact is that the largest oil consumers are hedgers of dollar inflation. Hence the inverse correlation of these instruments. Professional analysts, before currency trading, look at the dollar index to understand the trend directions. Conclusions Thanks to the index, you can understand the state of the US economy. DXY is a great addition to your strategy, which helps you identify trends or find discrepancies on the charts. Using the index you will avoid mistakes and increase your profit.
Education
by DeGRAM
3
🎯BTC & $US index: the secret combo for traders!📊Bitcoin is rising while the dollar is falling and vice versa. Today I will use the simple examples to show the pattern that helps to identify the trend of Bitcoin for many years. The instruments that we need: 🔶Bitcoin is the #1 cryptocurrency, the first and foremost crypto-asset, our favorite grandpa. Bitcoin's movement is copied by 99% of all crypto, it is the main indicator of the crypto market. 🔶DXY - U.S. Dollar Index. It was created in 1974 and shows the ratio of the US dollar to the basket of six other major currencies: euro, yena, pound sterling, Canadian dollar, Swedish krona and Swiss franc. The index essentially shows how strong the U.S. dollar is. 💡I've taken a few cycles as an example to make it easy to understand this principle. For the example, I don't take data up to 2017. At that time Bitcoin was with the small capitalization and a big HYPE. You're not interested in perfect examples, but in real experience and usage, aren't you? So, the first cycle of 2017-2018 shows us that: 1. as soon as the index started to fall🐻, Bitcoin had an active bull run. 2. when the index hit lows it was almost Bitcoin's tops. The second cycle of 2018-2020, Bitcoin spent in a huge consolidation and two corrections of -70%🐻 What was the index doing this time? Of course it was rising! Only after the last fall of Bitcoin in 2020, it was able to recover and continue its rise to the new ATH! In the third cycle of 2020-2021 Bitcoin was able to grow to $63-67 thousand due to the unprecedented weakness of the dollar. Now Bitcoin is in consolidation and even the mass adoption and hype around crypto is not help BTC to renew ATH. 🏁The dollar was weakening amid huge inflation and Bitcoin was rising, but when the FED began raising the interest rate and investors began to transfer money from Europe to the United States, the index began a new bull run. You saw an example of what happens during an index bull run. Therefore, we should expect an active phase of Bitcoin growth at the moment when the FED rate hike ends (the end of August) and geopolitical issues will be solved😉 Friends, press the "like"👍 button, write comments and share with your friends - it will be the best THANK YOU. P.S. Personally, I open an entry if the price shows it according to my strategy. Always do your analysis before making a trade.
Education
by Yuriy_Bishko
12