The DXY chart in some way is a mirror effect of the EURUSD. So, we can see that in the DXY chart, the bullish trend is over in Nov 2020 last year. It has enjoyed a bull run for 9 straight years!!!
So, just like in all longs, it will go through a correction/retraction/pull back before it continues its way up, the shorts behave the same pattern too. Now, we are seeing a pullback in DXY thus the EURUSD is going south, leading to some people thinking the market is going to crash and EURUSD is back to 1 dollar kind of stuff.
Rather than finding one million reasons to say why it will fall or rise, let the chart patterns guide you what to do. In DXY chart, we see the two levels of resistance or two levels of support for the EURUSD. Unless, the price actions breaks above both levels of resistance in DXY (highly unlikely though possible), we should not jump into conclusion that market is going to crash and start liquidating our positions.
I have just initiated a long position in EURUSD at the first level of support and will continue to buy more if it goes to level two. Of course, I have stop loss limit for both longs so that if market moves against me, my damage is controlled and not a total catastrophic loss.
People likes to find all sorts of reasons to justify why a particular financial instrument is going up or down. From the economic standpoint using GDP, unemployment data to politics - which president is leading and even how the vaccines distribution is being handled in each country. I think to some degrees, all points are relevant BUT the million dollar question is what exactly caused the price action to shoot up is anyone guess. I have said before that I read news more for knowledge and entertainment rather than a big part of my analysis. Turn to any news side and you would find one day the analysts are bullish and the next day they are Dr Doom. Are you going in and out of the market based on what they say ?
Have a great trading day ahead !
So, just like in all longs, it will go through a correction/retraction/pull back before it continues its way up, the shorts behave the same pattern too. Now, we are seeing a pullback in DXY thus the EURUSD is going south, leading to some people thinking the market is going to crash and EURUSD is back to 1 dollar kind of stuff.
Rather than finding one million reasons to say why it will fall or rise, let the chart patterns guide you what to do. In DXY chart, we see the two levels of resistance or two levels of support for the EURUSD. Unless, the price actions breaks above both levels of resistance in DXY (highly unlikely though possible), we should not jump into conclusion that market is going to crash and start liquidating our positions.
I have just initiated a long position in EURUSD at the first level of support and will continue to buy more if it goes to level two. Of course, I have stop loss limit for both longs so that if market moves against me, my damage is controlled and not a total catastrophic loss.
People likes to find all sorts of reasons to justify why a particular financial instrument is going up or down. From the economic standpoint using GDP, unemployment data to politics - which president is leading and even how the vaccines distribution is being handled in each country. I think to some degrees, all points are relevant BUT the million dollar question is what exactly caused the price action to shoot up is anyone guess. I have said before that I read news more for knowledge and entertainment rather than a big part of my analysis. Turn to any news side and you would find one day the analysts are bullish and the next day they are Dr Doom. Are you going in and out of the market based on what they say ?
Have a great trading day ahead !
Comment:
Praise the Lord, the timing once again was perfect !