If dollar is down, then gold will be up. I will long it. Sounds right !
So, in an attempt to earn your profits faster over a shorter period of time, assuming you execute the 2 trades consecutively, then you could land up with double profits or double of your losses.
Remember these rules :
Rule 1 - Protect your capital at all costs
Rule 2 - Refer to Rule 1
So if you adhere to this Rule (which I did not in the past and I was way above my head, thinking I am some Wall Street hedge fund guy that can command the rain to come. How silly of me ! Results - blow accounts after accounts), then you would only do either one trade, ie. Buy or Sell dollar but NOT BOTH !
WHY ? What can possibly goes wrong ?
That's why I say it is tough, really tough to pinpoint what causes the dollars to go up at a particular point in time. We all know interest rates, President Trump speech, Geopolitics, etc will affect but which one does it move the dollar ? Is it one or collectively ?
And because macroeconomics is so wide and diverse , it becomes mind boggling to study all of them (at least for me). Fortunately, in trend charting, you need not study all these stories behind the price movement, we believe all news are already priced in.
What about Gold ? We also know it is a safe haven asset. When people are uncertain of the market, fearful, they hoard to Gold . Then you asked -stock market is crazy now, risk on mode, how come Gold is up! That's the part that puzzles many , including me. But if you map the Gold and USD chart in weekly basis, you would find periods of time when both heads up or down together. So , this is one of those times.
Rather than knowing why, it is more important for me to know if there is a trade opportunity in it. If yes, how can I capitalise on it?
Now looking at the chart, you can see dollar is at an inflection point, reaching the tip of the . Magnify the chart bigger and you would realise that the past few days, the price action is not much of action, i.e. little movement.
Gold is more obvious on the other hand, hitting the resistance at 1611 and has corrected to current level of 1551. If it breaks down from 1550 , then we can see gold heading further south ,possibly towards 1450. We would like to short then.
USD could break out of 97 and hits towards 98 level though I think chances of revisiting the 94-95 is higher.
Whatever the case turns out to be, take only one trade, no right or wrong, just your preferences but avoid both.
Taking on both is a sure way to burn your account fast and furious when the market turns against you and it will............Never try to outsmart the market.