There are many fundamental arguments for and against the strengthening of the US dollar. I'm not really interested in those. My roadmap is the charts. I will therefore update my thoughts based on the price path(s) I see forthcoming.
In my last update of EURUSD (my proxy for the US Dollar), I was looking for prices to continue to push higher towards the 61.8% fibonacci level @ 1.13 on the condition that we do not observe a CHANGE in the price behaviour of the current ascent from the Sept bottom.
No sooner did I write up that update, EURUSD started to reverse lower after hitting the 50% fib. level. That was not an issue, it could have been just a typical short-term pause or retracement like any previous moves since the bottom.
⚠️ However, last week, that "typical" retracement is not longer the case. The drop is more extended. It is a CHANGE of behaviour.
As I often repeat, this does not mean that the uptrend has ended. It is far too early to state that as a fact. Price can reverse back higher and break the recent high to extend the rally further to that 1.13 level as mentioned above. However, the chances of that has diminished somewhat.
📉📈 The higher probability is that the price will reverse higher but fail to break the recent high. It then trades up and down sideways or straightaway falls sharpely. Another way of saying this is that the price may try to re-test the recent high, but it ultimately fails. Leaving the only path left and that is back down. Of course, at this moment, that is far from certain.
🤞 IF I were holding a buy position in EURUSD, what should I do as a responsible risk manager?
✅ I would consider these options:
1) Exit ALL my BUY position immediately OR
2) Partially exit my position to reduce exposure OR
3) Take the risk to only partially or fully exit my position by trailing a stop-loss once prices move to re-test the high (to get a better exit price). Ideally there is a hard stop-loss placed if prices continue to drop instead of any re-test higher.
☑️ I can then add back my position once the uptrend is re-established.
❌ What would I NOT consider doing:
i) Continue to hold on indefinitely in the hope that price reverses back higher
ii) Increase my buy position thinking this is just like any previous dip
Whilst (i) and (ii) are possible, I don't think it is a responsible way of managing risk. You may get lucky on this occasion but don't count on doing so over the long run.
What would you do? Do you have an alternative approach to share?
Not Investment Advice
MrStocky
In my last update of EURUSD (my proxy for the US Dollar), I was looking for prices to continue to push higher towards the 61.8% fibonacci level @ 1.13 on the condition that we do not observe a CHANGE in the price behaviour of the current ascent from the Sept bottom.
No sooner did I write up that update, EURUSD started to reverse lower after hitting the 50% fib. level. That was not an issue, it could have been just a typical short-term pause or retracement like any previous moves since the bottom.
⚠️ However, last week, that "typical" retracement is not longer the case. The drop is more extended. It is a CHANGE of behaviour.
As I often repeat, this does not mean that the uptrend has ended. It is far too early to state that as a fact. Price can reverse back higher and break the recent high to extend the rally further to that 1.13 level as mentioned above. However, the chances of that has diminished somewhat.
📉📈 The higher probability is that the price will reverse higher but fail to break the recent high. It then trades up and down sideways or straightaway falls sharpely. Another way of saying this is that the price may try to re-test the recent high, but it ultimately fails. Leaving the only path left and that is back down. Of course, at this moment, that is far from certain.
🤞 IF I were holding a buy position in EURUSD, what should I do as a responsible risk manager?
✅ I would consider these options:
1) Exit ALL my BUY position immediately OR
2) Partially exit my position to reduce exposure OR
3) Take the risk to only partially or fully exit my position by trailing a stop-loss once prices move to re-test the high (to get a better exit price). Ideally there is a hard stop-loss placed if prices continue to drop instead of any re-test higher.
☑️ I can then add back my position once the uptrend is re-established.
❌ What would I NOT consider doing:
i) Continue to hold on indefinitely in the hope that price reverses back higher
ii) Increase my buy position thinking this is just like any previous dip
Whilst (i) and (ii) are possible, I don't think it is a responsible way of managing risk. You may get lucky on this occasion but don't count on doing so over the long run.
What would you do? Do you have an alternative approach to share?
Not Investment Advice
MrStocky
🏆 eToro Popular Investor 💰
✅ Copy My Trades @ eToro, www.etoro.com/people/mrstocky
✅ Verified Track Record 📈
Not Investment Advice
✅ Copy My Trades @ eToro, www.etoro.com/people/mrstocky
✅ Verified Track Record 📈
Not Investment Advice
