Many new traders ask me how do you know when to trade currency pairs and how do you know which direction the price action will move?
The short answer is no one knows which direction the price is going to go and the price action in forex is very susceptible to news so always be aware of what’s happening in the market you trade in.
Indicator: Dollar index (DXY)
A very good indicator I use for trading dollar crosses is the dollar index (DXY) and currently it is on the rise as seen in the chart above. The index was in a downward channel for a couple of months and finally broke out giving strength to the dollar. We can see a possible inverse head and shoulders pattern forming on the dollar index (DXY) and this will give a negative outlook for dollar crosses.
See my latest technical take on the EUR/USD
Always remember to apply your risk management measures before placing your trades as this will keep you trading in the markets.
Read more notes by Barry HERE.
All charts sourced from Bloomberg
Barry Dumas | Trading Specialist at GT247.com
Disclaimer: Any opinions, news, research, analyses, prices, or other information contained within this research is provided as general market commentary, and does not constitute investment advice. GT247.com will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The content contained within is subject to change at any time without notice, and is provided for the sole purpose of assisting traders to make independent investment decisions.
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