DXY weekly analysis. Do we break 93 and go lower or pullback?
DXY – US Dollar Index
Oh how the mighty have fallen!
The US dollar index fell for the third straight week in a row last week, closing at 93.974. At the beginning of the week we laid patient in ‘wait and see mode’ paying attention to how 94.00 would play as a level of support. First thing Monday price closed the trading day at 93.87. Verifying our downward bias and invalidating our level of support. We knew at that point risk on strategy would remain in charge for the remainder of the week.
Now, with price threatening to breach below the 93 level, we are experiencing the same wait and see scenario. Only this time we have real cause for concern. The 92-94 level has held the greenback for almost three years. Seems illogical to think price is just going to blow through these levels. However, the trend is on a tear and pushing very hard toward 90. I’d even say we may see mid 80’s by years’ end.
The largest threat here is a trend reversal. ALL USD pairs are over extended and do for major retracements. The pressure felt by risk on traders will be quick and overwhelming. I suspect any moves to the upside to be quick and unsophisticated. WE WILL NOT be counter trend trading them. However, in the event of major pullbacks, we will be designing strategic, higher timeframe, with trend entries.
Summary
We will be patiently waiting for price to break below 93 to ride solid sell signals or price to consolidate/move up to form strategic trend resumption entries. NO COUNTER TREND TRADING!
LWM Current risk on/risk off definition.
Risk ON Risk OFF
DXY down DXY Up
Indexes UP Indexes Down
XXX/USD pairs UP XXX/USD pairs DOWN
Trade at your own risk!
Oh how the mighty have fallen!
The US dollar index fell for the third straight week in a row last week, closing at 93.974. At the beginning of the week we laid patient in ‘wait and see mode’ paying attention to how 94.00 would play as a level of support. First thing Monday price closed the trading day at 93.87. Verifying our downward bias and invalidating our level of support. We knew at that point risk on strategy would remain in charge for the remainder of the week.
Now, with price threatening to breach below the 93 level, we are experiencing the same wait and see scenario. Only this time we have real cause for concern. The 92-94 level has held the greenback for almost three years. Seems illogical to think price is just going to blow through these levels. However, the trend is on a tear and pushing very hard toward 90. I’d even say we may see mid 80’s by years’ end.
The largest threat here is a trend reversal. ALL USD pairs are over extended and do for major retracements. The pressure felt by risk on traders will be quick and overwhelming. I suspect any moves to the upside to be quick and unsophisticated. WE WILL NOT be counter trend trading them. However, in the event of major pullbacks, we will be designing strategic, higher timeframe, with trend entries.
Summary
We will be patiently waiting for price to break below 93 to ride solid sell signals or price to consolidate/move up to form strategic trend resumption entries. NO COUNTER TREND TRADING!
LWM Current risk on/risk off definition.
Risk ON Risk OFF
DXY down DXY Up
Indexes UP Indexes Down
XXX/USD pairs UP XXX/USD pairs DOWN
Trade at your own risk!
Comment:
We have been very patient this week, as we have not traded at all. USD is rejecting 93.90 level. With trend trades considered into next week. Price moved too rapidly to gain entries on this latest test of 94. If we seesaw back and fourth, the strategy will be clear, enter quick. Believe in this trend.
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