- Dollar trades at important resistance as markets remain uncertain
- US Dollar coiling up for a big move, but we need to see confirmation before trading it
The US Dollar continues to coil up for its next move versus the Euro and other counterparts. But how might we trade it? These are the factors we're watching.
An important Dollar bounce leaves the Dow Jones FXCM Dollar Index at important resistance, and we'll need to see conviction in its next move to have confidence in our earlier calls for an important USD bounce.
Indeed last week we pointed to potentially significant sentiment extremes as a key reason the Greenback was set to surge higher across the board.
A look at market cycles and time studies suggest the next major Dollar move versus the Euro may have to happen midweek to take confidence in calls for an important EURUSD top.
Euro Continues To Move Sideways at Potentially Critical Resistance
This makes trading admittedly difficult as it makes sense to stand pat until we see a major break in either direction. Yet "flat" is certainly a position as markets remain especially uncertain.
Source: OTC FX Options Prices from
DailyFX Individual Currency Pair Conditions and Trading Strategy Bias
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Volatility Percentile - The higher the number, the more likely we are to see strong movements in price. This number tells us where current implied volatility levels stand in relation to the past 90 days of trading. We have found that implied volatilities tend to remain very high or very low for extended periods of time. As such, it is helpful to know where the current implied volatility level stands in relation to its medium-term range.
Trend - This indicator measures trend intensity by telling us where price stands in relation to its 90 trading-day range. A very low number tells us that price is currently at or near 90-day lows, while a higher number tells us that we are near the highs. A value at or near 50 percent tells us that we are at the middle of the currency pair's 90-day range.
Range Low - 90-day closing low.
Last - Current market price.
Bias - Based on the above criteria, we assign the more likely profitable strategy for any given currency pair. A highly volatile currency pair (Volatility Percentile very high) suggests that we should look to use Breakout strategies. More moderate volatility levels and strong Trend values make
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