DXY Targeting A Wave 4 LowIn this update we review the recent price action in the Dollar INde and identify the next high probability trading opportunity and price objectives to target
SDX1! trade ideas
U.S. Dollar Index Future ( DX1! ), H1 Potential for Bearish DropType : Bearish Continuation
Resistance : 103.265
Pivot: 102.380
Support : 101.985
Preferred Case: With price moving below the ichimoku cloud, we have a bearish bias that price will drop to our 1st support at 101.985 in line with the 100% fibonacci projection from our pivot at 102.380 in line with the horizontal overlap resistance and 61.8% fibonacci retracement.
Alternative scenario: Alternatively, price may break pivot structure and head for 1st resistance in line with the overlap resistance, -27.20% fibonacci expansion and 50% Fibonacci retracement.
Fundamentals: In the face of strong inflation, Bostic emphasized that two 50-bps raises at forthcoming Fed meetings are still realistic. We have a Mixed-to-Weak Bearish view on the index.
Fibonacci Convergence and turning points.
We suspect that the US Dollar up move that has been in play for a little over one year is most likely done for now. Firstly, the market has failed to maintain its bid to head above the 103.91/86 peaks seen in 2017 and 2020 AND the daily RSI has a large divergence reflecting a severe loss of upside momentum. This is seen when price makes a new high BUT the RSI does not. But for us the most telling factor is the convergence of the Fibonacci retracements.
Sorry what? This happens when Fibonacci retracements from a number of different lows or highs to find a level where 2 or more retracements are at or near the same level. Over the years I have observed when this happens it frequently coincides with a strong possibility of a turning point.
For example, a Fibonacci convergence can be seen on the US Dollar Index daily chart where we can see the 38.2% retracement from the September 2021 low and the 50% retracement from the 2022 low converge at 99.80/97. The 50% and 61.8% retracements lie 98.41/57 etc
Nearby support is 102.37, the 5th May low, but we suspect that the market will retrace towards its 55-day ma at 100.85 with the 38.2% and 50% retracements at 99.97/80 acting as our short-term target.
Disclaimer:
The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
U.S. Dollar Index Future ( DX1! ), H1 Potential for Bearish ContType : Bearish Continuation
Resistance : 103.235
Pivot: 102.830
Support : 102.370
Preferred Case: With price moving below the ichimoku cloud, we have a bearish bias that price will drop to our support in line with the horizontal swing low support and 78.6% fibonacci projection from our pivot in line with the horizontal pullback resistance.
Alternative scenario: Alternatively, price may break pivot structure and head for 1st resistance in line with the overlap resistance, 78.6% Fibonacci projection and 50% Fibonacci retracement. Take note of intermediary support at 102.680.
Fundamentals: The overarching aggressive hawkish Fed rhetoric has largely been priced in, allowing longs an excuse to take profit until the central bank chief Powell speaks on 25 May. We have a Mixed-to-Weak Bullish view on the trade.
Bitcoin wish! I hope to see this drop
This will help Bitcoin market to go up Easily
There is an inverse relationship between
Dollar Index and the Cryptocurrency Market
Dollar - DX DXY DOLLAR WEF Summit in DAVOS Began today, May 22, 2022.
World Economic Forum members are face to face
\as opposed to Virtual.
Topics include Ukraine, Energy, Nato, and Climate.
Government Policies will be shaped this weekend
for the next 18 months.
Volatility & Stability will be addressed with strategy
sessions will be addressed in breakout groups to present
a composite solution.
This meeting has been postponed as it is usually held in
January.
Acceleration of Policies and Agenda are to be anticipated.
The result will have broad-reaching Market implications.
DX1! - Weekly Market Update, 5/23/22US Dollar Index struggles to breakout of its multi-year rangebound pattern.
It has yet to offer us a weekly settlement above our 1%+ confirmation.
As the US Dollar tops, typically major corrections occur around it... Dot.com burst, Great recession, Covid-19, etc.
Wishing you a blessed and profitable week ahead!
DXY Is Slowing Down As Stocks Nearing SupportHello traders, today we will talk about US dollar Index- DXY compared to US stocks, specifically SP500.
What we see on DXY is an intraday five-wave decline from the highs after a completed higher degree wave 5th. In Elliott wave theory it means that US dollar may face bigger A-B-C corrective decline, especially if we consider 5th wave and strong support on SP500.
Now that SP500 keeps pushing lower with room for more weakness within wave 5, DXY could face a corrective recovery into wave B. Later then, when SP500 completes its 5th wave and finds the support, this is when can expect further weakness within wave C for the US dollar.
Trade well!
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Disclosure: Please be informed that information we provide is NOT a trading recommendation or investment advice. All of our work is for educational purposes only.
US Dollar may have reached a PEAK. Could be BIG for metalsThis chart shows the US Dollar has rallied back to highs - setting up what may be a triple-top.
I find it interesting that strong downward momentum in the US markets is freaking everyone out - yet my custom indexes suggest that the US/GLOBAL markets are seeking a bottom.
One thing is for sure - the US Dollar has RIPPED higher and could be setting up a dramatic shift if the global economy rolls into Stagflation.
I see the rally in the US Dollar as a flight to safety for foreign capital (moving into US assets and attempting to avoid foreign current risks).
Yet the Fed is actively trying to deflate that trend by raising rates.
In some way, the US Dollar may continue to stay stronger than other foreign currencies, but I see the US Dollar moving downward over the next 12+ months as the Fed attempts to burst asset bubbles.
Capital will flow where opportunities exist - that may still be in US Assets. But I see the US Dollar moving downward while other currencies move lower as well.
The great Unwinding is here. Should be fun.
Emotional Responses are Dangerous in this EnvironmentMarkets across all asset classes hate uncertainty because it causes traders, investors, and all market participants more than a bit of indigestion. Fear and greed are emotions that drive impulsive behaviors. Effective decision-making depends on a rational, logical, and reasonable approach to problem-solving.
The Fed finally addresses inflation
Recessionary risks are rising
Stagflation creates the worst of both worlds
Tools impact the demand side- The supply side is a challenge
Tools and rules for keeping emotions in check during scary times
Reducing impulsive, emotional responses is a lot easier said than done. While it is easy to mitigate emotion during calm periods, they take over and trigger fear or greed-based actions in the heat of the moment.
In mid-May 2022, the markets face a crossroads. The current market correction is a function of rising interest rates, the potential for an economic decline, a rising dollar, the war in Europe, supply chain issues, geopolitical tensions between nuclear powers, and a host of other domestic and foreign factors.
It is now the most critical period in decades to take an emotional inventory that will avoid catastrophic, impulse-based mistakes. Wide price variance in all markets could accelerate, and those with a plan are the most likely to succeed and protect their hard-earned capital.
The Fed finally addresses inflation
The US central bank had an epiphany after mistakenly believing that rising inflationary pressures were “transitory” in 2021. The Fed woke up smelling the blooming inflationary environment late last year when CPI and PPI data showed the economic condition rose to the highest level in over four decades.
At the May 4 meeting, the central bank hiked the Fed Funds Rate by 50 basis points to 75 to 100 basis points. The central bank told markets to expect 25 or 50-basis point hikes at each meeting for the rest of 2022 and into 2023. The Fed also laid out its plans to reduce its swollen balance sheet, allowing government and debt securities to roll off at maturity. While the Fed has switched to a hawkish monetary approach, it remains behind the inflationary curve. Last week, April CPI came in at 8.3% with PPI at 11%, meaning real short-term interest rates remain negative, fueling inflation. While wages are rising, they are lagging behind inflation. Consumers may be earning more but spend even more on goods and services each month.
Recessionary risks are rising
The US first quarter 2022 GDP data showed a 1.4% decline or economic contraction. The war in Russia, sanctions and retaliation, supply chain bottlenecks, deteriorating relations with China, political divisiveness in the US, and many other issues weigh on the US economy. Meanwhile, rising US interest rates have put upward pressure on the US dollar, pushing the dollar index to a multi-year high.
As the chart shows, the dollar index rose to 105.065 last week, a two-decade high. A rising dollar is a function of increasing US rates, but it makes US multinational companies less competitive in foreign markets.
The falling GDP in Q1 2022 increases the threat of a recession, defined as a GDP decline in two successive quarters, putting pressure on the Q2 data this summer.
Stagflation creates the worst of both worlds
Recession and inflation create stagflation, the worst of all worlds for central bankers seeking stable markets and full employment. The most recent economic data has put the US economy on the road towards stagflation as rising prices and a sluggish economy require competing monetary policy tools.
The Fed is addressing inflation with higher interest rates and quantitative tightening, but recession requires stimulus, the opposite of the current hawkish monetary policy path. The central bank must decide on which economic condition threatens the economy more. The Fed seems to have chosen inflation, but it is more than a reluctant choice. Tightening credit treats the inflationary symptoms, but it can exacerbate recessionary pressures as higher rates choke economic growth. Stagflation is an ugly economic beast.
Tools impact the demand side- The supply side is a challenge
Meanwhile, the US and other central banks have deep toolboxes that address demand-side economic issues. While inflation and recession require different tools, the Fed faces other compelling factors from the global economy’s demand side.
The war in Ukraine is distorting prices as sanctions on Russia and Russian retaliation distort commodity prices. Moreover, the “no-limits” alliance between China and Russia creates a geopolitical bifurcation with the US and Europe. With nuclear powers on each side of the ideological divide, economic ramifications impact the economy’s supply side. China is the world’s leading commodity consumer, and Russia is an influential and dominant raw materials producer. Energy and food prices are the battlegrounds.
Central banks have few tools to deal with supply-side shocks and changes, which can create extreme volatility in the prices of goods and services. The Chinese-Russian alliance transforms globalism with a deep divide. Global dependence on Chinese demand and Russian supplies distorts raw material’s supply and demand fundamentals. While the US Fed faces a challenge balancing inflation and the potential for a recession, the supply side issues only complicate the economic landscape, increasing market volatility across all asset classes.
Tools and rules for keeping emotions in check during scary times
The best advice for dealing with anxiety came from US President Franklin Delano Roosevelt, who said, “the only thing to fear is fear itself.” Conquering fear requires a plan that mitigates emotions no matter the market conditions.
The Fed’s toolbox is bare in the current environment, creating a volatile landscape. Chasing inflation and dealing with a recession in the face of supply-side shocks is a potent cocktail for price variance. Investors and traders need to change their orientation to markets to adapt to the current conditions. The following tools and rules can assist in mitigating the human impulses that lead market participants to make significant financial mistakes:
Hedge portfolios using market tools to protect the downside and allow for upside participation. Hedging reduces the impulse to liquidate portfolios because of fear.
Since volatility creates opportunities, approach markets with a clear plan for risk versus reward.
Remember that the market price is always the correct price. A risk-reward plan only works when risk levels are respected. Markets are never wrong, while traders and investors are often wrong.
A long or short position should constantly be monitored at the current price, not the original execution price. Positions are long or short at the last tick.
Adjust risk and reward levels based on current market prices.
Follow trends, not news, “experts,” or pundits. Trends reflect the crowd’s wisdom, and collective wisdom reflects the sentiment that drives prices higher or lower.
Never attempt to pick the top or the bottom in a market, let the price trends do that for you.
The rules are simple, but emotions are tricky. The emotions that trigger impulsive behavior cause market participants to ignore the rules. The critical factor for success in markets is discipline, defined as “the practice of training people to obey rules or a code of behavior, using punishment to correct disobedience.” When it comes to our hard-earned savings and portfolios, the punishment is losses.
Tuck those emotions away and face the volatile market landscape with a plan. Hedge your nest egg, and you will sleep better each night. Remind yourself that fear is the only factor you should fear.
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Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility , inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
DX DXY USD - Dollar 2 HourAfter reaching parity with the Swiss Franc Facta, the DXY peaked ST over 1.05.
Our TOSS level was 104.55, it has been met Short Term on a Throw Over.
It's nowhere near done moving higher, but for now, will range to digest a large
move into the Safety Trade
It did peak while sentiment was reaching extremes unseen. Again we do not
expect Extreme Fear readings to give up much more than a persistent Fear
Reading.
Only Direct Subsidies to Consumers and FMonetary/Fiscal Pivots will resolve the
embedded Senticators.
____________________________________________________________________
My long-standing FX Accident Thesis is well underway and will continue into
October of 2023.
A new Low at the close of the session sends the DX lower, a potential distribution
is setting up nicely Shorter Term.
We'll need to see if this ends up with a larger distribution. It well may be turning
slightly on this pattern.
Observing the reaction on Gold will be telling, it did hit my PO @ 1798.90 dipping
in ever so slightly. Gold is reaching a DOM demand level.
The COT remains in a SELL for Large Participants.
Is a surprise in store, there appears to be one waiting in the shadows.
DX1! - Weekly Market Update, 5/16/22US Dollar index continues to grind higher. It's clear the dollar is the safe haven that the market is gravitating towards during this recent downturn as we are witnessing weakness in the gold futures market as well. The dollar as broken through and settled above an area of know resistance. Looking back, we've just traded higher than where the dollar had peaked prior to the Covid-19 initial sell off. I see longer term descending resistance currently @ $110.XX. Wishing you a blessed and profitable week!
U.S. DOLLAR INDEX FUTURESPenetrate the strong bounce zone and continue to climb and now it will continue to climb to the top points
US Dollar Breaks 5-Year High!In last week’s post, I highlighted that the US Dollar was being held at a major
resistance level and was preventing price from climbing any higher. So far this
week, price has broken through.
Closing prices are more critical than intraday movement, so although price is
above resistance, it does not mean it will stay above it at the end of the business day.
This resistance has held strong for over five years, so it will take a lot of momentum
from the buyers to keep price above resistance at $103.
The resistance level is actually the high of a large area of consolidation, with the
support low at $90. Following a breakout of the high, we need to see a pattern of
higher highs to confirm that a trend is forming. This will reduce the likelihood of
price returning into the consolidation zone.
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If you have any questions or comments, comment below. We reply to every comment!
See below for more information on our trading techniques.
As always, keep it simple, keep it Sublime.
DX1! - Weekly Market Update, 5/9/22US Dollar Index remains testing all-time highs.
At this time, I do not see any actionable setups that meet my criteria.
Wishing you a blessed and profitable week!
US DOLLAR - Seniorage104.55 presents some issues for the perennial DX Bears.
Will it arrive, we've been suggesting as much for months on end.
It is quite often Gold Bugs who cheer the Dollars demise, without
realizing Gold has moved up with the Dollar.
Why?
Curious is it not, but the answer is simply Fear.
Projecting what should never be... is not a winning trade in Fear.
We are reaching the later stage of Capitulation, extreme volatility
signals this event.
Tomorrow will be interesting as the MAY VIX Futures left several micro
Gaps below @ 29.24 and 30.05.
Is the end near?
Yes, it is quickly and violently approaching.
We will be watching the ES reaction @ 3949.50.
Trade safe and good luck~!
HK
Renko charts - Clean out the noiseI recently attended a talk by Stephen Hoad on behalf of the STA for the CISI, where he discussed his use of Renko charts. Well, it piqued my interest and I decided to take a closer look myself.
Renko charts were invented in Japan, they ignore time and just use price changes that meet a minimum requirement, which to my mind sounds exactly like Point & Figure charts (I love these). Instead of X-Columns and O-Columns, Renko charts use price “bricks” that represent a fixed price move. These bricks are sometimes referred to as “blocks” or “boxes.” They move up or down in 45-degree lines with one brick per vertical column. Bricks for upward price movements are one colour while bricks for falling price movements are filled in another colour. In the example attached I have a chart of the US Dollar Index, where upward price moves are green and downwards are red. This example uses a 0.5 brick size.
Please note the irregular time span along the y-axis . Also note that it uses an average true range of 14 days. For an explanation of average true range (ATR) please follow this link school.stockcharts.com
N.B when adding indicators say a 20-period moving average, this will be based on the last 20 Renko values NOT the last 20 days.
I always think that these types of charts look optically ‘cleaner’ or clearer than the more typical bar chart. They completely ignore time, and a brick is only drawn if price moves by a set amount. If it moves less than the set amount, no brick is drawn.
In contrast to fixed price bricks, using ATR values results in fluctuating brick sizes. The default ATR is based on 14 periods and the Average True Range fluctuates over time. The brick size is based on the ATR value at the time the chart is created. Should the ATR value change the next day, then this new ATR value will be used to set the brick size. Also note that ATR values are based on standard charts, such as close-only, bar and candlestick.
Disclaimer:
The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
Bites Of Trading Knowledge For New TOP Traders #11 (short read)Bites Of Trading Knowledge For New TOP Traders #11
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What is Fundamental Analysis? -
Fundamental analysis is a method of determining a market’s “real value” or "fair market" value through the collection and examination of financial and economic information. Information gathered may include financial metrics which identify business drivers of the market, and could involve financial modeling of the market.
Fundamental analysts search for markets that are currently trading at prices that are higher or lower than what is expected to be their fair market value. If the fair market value is calculated to be higher than the market price, the market is deemed to be undervalued and could be considered to be bought. Conversely, if the fair market value is calculated to be lower than the market price, the market is deemed to be overvalued and could be considered to be sold.
What is Technical Analysis? -
Technical analysis is a method employed to evaluate a market and identify trading opportunities with a focus on inputs that include price and/or volume. Various financially based calculations and statistical models are commonly employed to derive price trends and patterns based upon which trading decisions are made.
Technical analysts believe past trading activity and price changes of a market could be valuable indicators of a market’s future price movements.
RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS -
Common application of financial market instruments for managing risk and opportunities.
Portfolio Diversification
Portfolio diversification is the process of investing your money in different asset classes and securities in order to minimize the overall risk of the portfolio.
For both corporate and individual investors, having access to markets that enable the building of a diversified portfolio is an important consideration when managing futures focused accounts.
Similar to managing risk, the market to trade would be a key variable to clearly state and support with reasons for trading or investing. Reasons for selecting one market over another could include price volatility, liquidity, daily volume traded, size of the minimum price increment, and value of the minimum price increment. Comparing these variables between markets will help decide the suitability and/or risk of each.
For example, the parameters for a price driven strategy may be designed to be applied to any market whether it be index equity futures or forex futures. However, the signals for entry may not always trigger if a trader were just to focus on a single index equity futures such as the Micro MSCI Europe Index futures. Having access to other futures markets, such as the Mini Onshore Renminbi/US Dollar Futures, can introduce both a foreign currency and Asian element to a portfolio. This allows for the creation of a diversified portfolio with varying entry and exit points, or the ability for more trading oriented investors, increased opportunities to execute price driven strategies more often across a range of futures markets.
TRADDICTIV · Research Team
--------
Disclaimer:
We do not provide investment advice, nor provide any personalized investment recommendations and/or advice in making a decision to trade. Before you start trading, please make sure you have considered your entire financial situation, including financial commitments and you understand that trading is highly speculative and that you could sustain significant losses.
The Euro Is Heading for Parity Against the DollarThe US dollar and the euro are the world’s reserve currencies. Political and economic stability and free convertibility are the requirements for reserve currency status. Central banks and governments worldwide gold the US and European currencies as reserve assets.
The exchange rate between the US dollar and the euro is multifactorial. Interest rate differentials, political trends, and other issues determine the value of each foreign exchange instrument versus the other. The euro has been around since January 1, 1999, and euro notes and coins were only available two decades ago, in 2002. The euro currency opened for trading in the futures market in April 2001 at an exchange rate of $0.8760 versus the US dollar.
The euro first rose above parity with the US currency in July 2002. The last time it was below was in December 2002, but the recent exchange rate price action and the factors determining currency values could send the euro back to levels not seen in two decades.
New highs in the dollar index- Approaching the test of the 2020 high
The US dollar index has a 57.6% exposure to the euro currency. Since January 2021, the dollar index has been on a bullish path, making higher lows and higher highs.
As the chart highlights, the dollar index futures contract moved from a low of 89.165 in early January 2021 to the most recent high of 103.950 on April 28, 2022, a 16.6% rise. The index is approaching a critical technical resistance level.
The long-term chart shows the upside target stands at the March 2020 103.960 high, the highest level for the index since 2022. A break above that level will make the next upside target the July 2001 121.290 high. A move towards that level would push the euro below parity against the US dollar for the first time in two decades.
Lower lows in the euro versus the US dollar foreign exchange relationship
A bearish trend in the euro versus the US dollar currency relationship is nothing new.
The chart shows the euro reached an all-time high against the dollar in July 2008 at $1.6038. Since then, it has been all downhill for the European currency. The euro reached a low of $1.03405 in January 2017. After a recovery took the euro to above the $1.25 level in February 2018, the downtrend resumed, and it was approaching the early 2017 low on April 29 at below the $1.075272 level. A move below the $1.03405 level makes the target the critical psychological parity level.
Herding cats- The European economic challenge
The European Union is a collection of countries with diverse cultures. Moreover, economic policy is a blend of different orientations to monetary and fiscal policies.
Southern Europe has depended on tourism and has had a far looser approach to economic management than the austerity of the north. The north has been the industrial powerhouse, providing financial stability for the Union.
Greece, Italy, Spain, and Portugal are far different economies than Germany, France, the Netherlands, and Belgium. Policy agreement between the Union members has been like herding feral cats over the past two decades. The north has bailed out the south routinely, causing stress on relationships within the Union and pressure on the euro currency.
Cultural differences have been the borders since the establishment of the European Union and continue to be a factor that impacts the euro’s value.
War on the border- An aggressive Russia is bad news for the euro
In early 2022, the European Union is facing its most challenging test since its birth. Russia’s invasion of Ukraine launched the first major war in Europe since WW II. Russian aggression is a challenge to NATO countries, particularly those bordering the former Soviet Empire. Over the coming years, European military budgets will need to dramatically increase to provide safety and deterrence against the Russian aggressor. As military spending rises, it is likely to pressure the euro currency as the Union faces new threats that transcend the costs of the cultural divide between the northern and southern countries. The threat will likely unify the north and south, but the price tag for unification will be staggering.
Rising US rates are another nail in the euro’s coffin- Parity is only the first stop – The trend is your friend
In currencies, exchange rates are highly sensitive to interest rate differentials. The US dollar and euro are the world’s reserve currencies. The US central bank has shifted its monetary policy path to a more hawkish approach with inflation. raging.
The March consumer and producer price indices rose by 8.5% and 11.2%, respectively. The US Fed ended its quantitative easing in March 2022 and will quickly shift to quantitative tightening, allowing debt securities to roll off its swollen balance sheet at maturities. The FOMC will increase the short-term Fed Funds rate by at least 50 basis points at this week’s May 4 meeting. US short-term interest rates are going nowhere but higher.
Meanwhile, the US 30-Year Treasury bond futures have been a falling knife, pushing interest rates higher further out along the yield curve.
The chart shows the decline in the long bond futures since the March 2020 high. The most recent 138-14 low on April 20, 2021, took the bellwether government bond futures to the lowest level since November 2018. Critical technical support stands at the October 2018 136-16 low. Below there, the next target is the 2013 127-23 low.
A falling bond market and higher interest rates make the dollar more attractive than the euro. Europe cannot afford to increase interest rates and keep pace with the US dollar interest hikes because of its economic and geopolitical landscapes. Therefore, the dollar’s bullish trend will likely continue over the coming weeks and months.
Bull and bear markets rarely move in straight lines. Currency markets tend to experience far lower volatility than stocks, bonds, commodities, and other asset classes as governments manage price moves with intervention to provide stability. However, technical and fundamental factors support the path to parity for the dollar and euro currencies. In 2000, the euro reached $0.8901 against the dollar, the long-term technical target.
A stronger dollar and weak euro will have significant ramifications for markets across all asset classes, but the currency markets are a mirage as they trade in a vacuum. A trip to the supermarket, gas pump, or purchasing any goods or services in dollars reveals that the US currency has lost substantial purchasing power over the past year. The dollar may be strong against the euro, and it looks set to continue the current path, but all fiat currencies are losing power. As one strategist said the dollar is “the cleanest shirt in the dirty laundry.”
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Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility , inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
US Dollar Could Go Higher!Since June 2021, price has been moving up strong, ploughing through the $100 major
round number, which is a psychological level of support/resistance.
April’s monthly candle closed bullish for the month and saw a move of 4.64% but was
stopped in its tracks by a major level of resistance.
The consolidation high at $103 is acting as resistance and this level was formed in
January 2017. Price has been moving sideways ever since, between this high and the
support at $88 from February 2018.
This is a wide area of consolidation so price has been able to form trends in this zone,
but a breakout could lead to an even bigger trend forming over a longer period of time.
Similar to the S&P 500, price is very close to breaking out. In this case, a pattern of
higher highs and higher lows above the consolidation zone, would be our signal to look
for entry opportunities.
Patience for now as the buyers and sellers battle it out where the outcome will determine
if we can go long or continue to stand aside.
If you like enjoyed this post, make sure to like, and follow for more quality content!
If you have any questions or comments, comment below. We reply to every comment!
See below for more information on our trading techniques.
As always, keep it simple, keep it Sublime.
Bites Of Trading Knowledge For New TOP Traders #10 (short read)Bites Of Trading Knowledge For New TOP Traders #10
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What is the Notional Value of a Futures Contract? -
Notional value of a futures contract is how much total value the contract theoretically controls.
Contract Size * Underlying Price = Notional Value Mini US Dollar Index® Futures (SDX) for example has a contract size of $200 x Index value and assuming the SDX price is 98.000, the notional value of the futures contract is $19,600.00.
What is the difference between Margin and Leverage? -
Margin is the amount of money deposited with the broker to control a futures contract. It is determined by the futures exchange and maybe adjusted by the broker to manage risk to their clients.
Leverage is the ability to use less money to theoretically control 1 futures contract compared with buying the product underlying the contract outright which amounts to the notional value of the futures contract.
To calculate how much leverage a futures contract gives, divide the notional value of the contract by the margin. The SDX example above had a notional value of $19,600.00 and with a margin requirement of $380, is equal to approximately 51 times leverage on our money ($19,600.00 / $380 = 51).
What is a Point and a Tick? -
Point is the smallest price increment that can occur on the left side of the decimal point. (Example. 90.000)
Tick is the price movement that occurs on the right side of the decimal when looking at the price of a futures contract and is the smallest possible price change measured by markets. A Point is composed of Ticks. (Example. 90.000) Mini US Dollar Index® Futures (SDX) has a minimum price fluctuation of $0.005 representing one tick and would move from 90.000 to 90.005. It takes 200 ticks to make one point or a move from 90.000 to 91.000.
RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS -
Common application of financial market instruments for managing risk and opportunities.
Hedging Portfolio Risk
Hedging spot Australian Dollar (AUD) exposure with the Mini US Dollar Index® Futures (SDX) contract is a way to manage portfolio risk by taking a directional position opposite to the underlying asset as protection. For example, a hedger may have plans to hedge downward price movement in AUD using futures contracts based on in-house market and portfolio analytical processes. The market analysis may use common technical analytical techniques such as support and resistance to formulate the trade decision. In the chart (Figure 1), if AUD is expected to weaken as it nears the resistance areas, the hedger may plan to enter into a long futures position using the Mini US Dollar Index® Futures (SDX) contract at or under the price levels of $0.7560 or $0.7460 to lock in the value of their underlying AUD position.
TRADDICTIV · Research Team
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Disclaimer:
We do not provide investment advice, nor provide any personalized investment recommendations and/or advice in making a decision to trade. Before you start trading, please make sure you have considered your entire financial situation, including financial commitments and you understand that trading is highly speculative and that you could sustain significant losses.
Bites Of Trading Knowledge For New TOP Traders #9 (short read)Bites Of Trading Knowledge For New TOP Traders #9
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What is Hedging? -
Hedging is the action taken through the use of a financial instrument to minimize the loss or risk of the loss of value of an asset due to adverse asset price movements.
Who are Hedgers? -
Hedgers are market participants such as commodity producers who want to lock in selling prices of commodities they produce, or food manufacturers who want to lock in buying prices of raw materials purchased.
Market participants also include financial institutions handling financial assets and use derivative products such as futures to manage the risk of a portfolio of financial assets.
What is the difference between Physically Delivered vs Cash Settled Futures Contracts? -
Physical delivery is a term in a futures contract which requires the actual underlying asset to be “physically delivered” upon the specified delivery date, rather than being traded out with an offsetting contract.
Cash settled futures on the other hand allows for the net cash amount to be paid or received on the settlement date of the futures contract.
Futures exchanges may offer both types of contracts to market participants who have different purposes for trading futures contracts.
RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS -
Common application of financial market instruments for managing risk and opportunities.
Risk management is the responsibility of market participants designed to limit risk exposures that specifically applies to the participants financial profile in the market.
The financial profile of a participant may include their role in the financial market or the amount of capital under their responsibility to be managed in the market, and therefore the risk variables that each would need to identify may be unique.
For both corporate and individual investors, the market to trade would be a key variable to clearly state and support with reasons for trading or investing. Reasons for selecting one market over another could include price volatility, liquidity, daily volume traded, size of the minimum price increment, and value of the minimum price increment. Comparing these variables between markets will help decide the suitability and/or risk of each.
For example, if Mini-Brent Crude Oil futures (BM) moves around $2.00 per day (or 2 points) and a point is worth $100, a trader might experience a $200 fluctuation in their account balance for one day. Another example is the U.S Dollar / Singapore Dollar (USDSGD), which could move 70 pips or more per day and trading a standard lot size with each pip worth $10, a $700 fluctuation could be expected for one day.
Market participants may also manage their risk through the size of their positions. The larger their position size, the greater is their exposure and the smaller their position size their exposure is lower. Investors should determine the risk that would result from various position sizes and select the size that ensures that their risk limit is not exceeded.
Finally, setting stops with a specified loss amount provides protection if the market does not move in the desired direction. It helps to prevent creating a loss scenario which is larger than an account can handle.
TRADDICTIV · Research Team
--------
Disclaimer:
We do not provide investment advice, nor provide any personalized investment recommendations and/or advice in making a decision to trade. Before you start trading, please make sure you have considered your entire financial situation, including financial commitments and you understand that trading is highly speculative and that you could sustain significant losses.
DX1! - Weekly Market Update, 5/2/22The US Dollar Index rallies into historical supply / resistance. The Dollar has typically fallen off hard after testing this area historically. We'll be watching it closely.
