In yesterday’s Daily Market Update we spoke about the dangers of trading between Christmas and New Years.
I’m not going to say that on Wednesday and then back Thursday up with a day trading setup, so I’ve focused today around a higher level view of the US Dollar Index, with the idea that you can use the levels to help plan your January 2017 trading in the majors.
First we zoom out to a weekly and look at the parabolic rally that we ended the year on thanks to the Fed’s hawkish 2017 outlook and to a lesser extent, Trump.
With price breaking out of that triangle, we have seen clean, technical retests of each weekly support/resistance level on the way up. This confirms that the USDX reacts to levels just like any other tradable forex chart.
But it’s the hourly where things start to get really interesting.
A clean triple top?
“A pattern used in technical analysis to predict the reversal of a prolonged uptrend. This pattern is identified when the price of an asset creates three peaks at nearly the same price level. The bounce off the resistance near the third peak is a clear indication that buying interest is becoming exhausted. It is used by traders to predict the reversal of the uptrend.”
Being the USDX, keep this chart in mind when you’re trading the majors come next week.
Opportunity will present itself in the new year. In the meantime, why not open a forex account with Vantage FX so you can experience the difference that trading with a true ECN broker gives.
Dane Williams – @VantageFX
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