BREAKDOWN OF THE SCREEN SHOT ABOVE
----------------------------------------------------------
DXY INDEX ( PURPLE LINE GRAPH ) AND EURO INDEX ( WHITE LINE GRAPH )
EUR AND USD ARE CLEARLY POSITIVELY CORRELATED. BOTH MIRROR IMAGES OF EACH OTHER..
( LONG TERM WEEKLY CHART SINCE 2009 ) - THE DXY HAS GAINED GROUND WHILE THE EURO HAS STEADILY DECLINED. THIS IS OUTLINED IN BOTH THE GREEN AND RED CHANNELS DEPICTED RESPECTIVELY.
WITHIN SUCH A HIGH TIME FRAME, AS WE ARE AWARE, ARE THE RUNS AND PULL BACKS WE ARE SO FAMILIAR WITH.
ITS THIS THAT CAUSES FOR ME CONCERN FOR THE DXY GAINING GROUND. FROM THE CHART DISPLAYED WE SEEM TO BE AT AN AREA OF RESISTANCE NOW FOR THE DXY, EFFECTIVELY A DOUBLE TOP PATTERN AT BROKEN SUPPORT NOW RESISTANCE.
I WOULD BE TARGETING THE BOTTOM OF THE CHANNEL FOR THE DXY.
IF THE IDEA DOES WORK, GIVEN THE POSITIVE CORRELATION BETWEEN THE TWO CURRENCIES, AN EQUAL SIZE RUN TO THE UP SIDE SHOULD BE EVIDENT ON THE EURO. IE - A MOVE TOWARDS THE TOP OF ITS CHANNEL.
I SEE ROOM FOR THE EURO TO FALL FURTHER YET, BUT UPON REACHING THE SUPPORT LEVEL, I THINK WE SEE THE BREAK DOWN IN THE USD OCCURRING AND THE MOVE LOWER.
A LARGE RISK:REWARD FOR THOSE THAT LOOK FOR TRADES ON THE WEEKLY AND PLAY THEM OUT ON THE DAILY CHART.
LOWER TIME FRAME TRADERS STILL HAVE TIME AND ROOM FOR MOVES TO GET LONG...BUT, I WOULD BE KEEPING AN EYE ON THE WEEKLY CHART FOR THE LARGER SENTIMENT DIRECTION, AND A CHANGE IN STRATEGY TO TRADE EURUSD.
SUMMARY
-----------------------
THE EASY PATH FOR THE EURO SEEMS TO BE UPWARDS, WHILE FOR THE DXY THE LEAST RESISTANCE TO MOVEMENT LOOKS TO BE DOWNWARDS.
----------------------------------------------------------
DXY INDEX ( PURPLE LINE GRAPH ) AND EURO INDEX ( WHITE LINE GRAPH )
EUR AND USD ARE CLEARLY POSITIVELY CORRELATED. BOTH MIRROR IMAGES OF EACH OTHER..
( LONG TERM WEEKLY CHART SINCE 2009 ) - THE DXY HAS GAINED GROUND WHILE THE EURO HAS STEADILY DECLINED. THIS IS OUTLINED IN BOTH THE GREEN AND RED CHANNELS DEPICTED RESPECTIVELY.
WITHIN SUCH A HIGH TIME FRAME, AS WE ARE AWARE, ARE THE RUNS AND PULL BACKS WE ARE SO FAMILIAR WITH.
ITS THIS THAT CAUSES FOR ME CONCERN FOR THE DXY GAINING GROUND. FROM THE CHART DISPLAYED WE SEEM TO BE AT AN AREA OF RESISTANCE NOW FOR THE DXY, EFFECTIVELY A DOUBLE TOP PATTERN AT BROKEN SUPPORT NOW RESISTANCE.
I WOULD BE TARGETING THE BOTTOM OF THE CHANNEL FOR THE DXY.
IF THE IDEA DOES WORK, GIVEN THE POSITIVE CORRELATION BETWEEN THE TWO CURRENCIES, AN EQUAL SIZE RUN TO THE UP SIDE SHOULD BE EVIDENT ON THE EURO. IE - A MOVE TOWARDS THE TOP OF ITS CHANNEL.
I SEE ROOM FOR THE EURO TO FALL FURTHER YET, BUT UPON REACHING THE SUPPORT LEVEL, I THINK WE SEE THE BREAK DOWN IN THE USD OCCURRING AND THE MOVE LOWER.
A LARGE RISK:REWARD FOR THOSE THAT LOOK FOR TRADES ON THE WEEKLY AND PLAY THEM OUT ON THE DAILY CHART.
LOWER TIME FRAME TRADERS STILL HAVE TIME AND ROOM FOR MOVES TO GET LONG...BUT, I WOULD BE KEEPING AN EYE ON THE WEEKLY CHART FOR THE LARGER SENTIMENT DIRECTION, AND A CHANGE IN STRATEGY TO TRADE EURUSD.
SUMMARY
-----------------------
THE EASY PATH FOR THE EURO SEEMS TO BE UPWARDS, WHILE FOR THE DXY THE LEAST RESISTANCE TO MOVEMENT LOOKS TO BE DOWNWARDS.