This week has been quite hard to trade and one of my rules is to simply stay out of trading when I can’t get a clear picture of the market. I have been more waiting for confirmations and see which levels are holding or breaking. After the rate hike the US Dollar Index rallied from 101 to 103.55, then we saw a small retreat to 102.50 this Monday. Then Tuesday back to the highs and reaching 103.60 and then retreating slowly back down with today’s low at 102.57.
Occasionally when the charts and the correlations don’t tell me much I look for clues elsewhere and find it interesting to check the Fear & Greed Index. 1 Week ago it was at Extreme Greed with 86points when all major indices made new highs. Yesterday it closed at 74 points and today it shows 67 points. So far the dollar Index has made higher highs and lows holding. At the end of the year the trading conditions get very different as many Funds and institutions start to close down positions to lower taxes and lock in their equities and the liquidity reduces significantly around the last days of the year.
Next year we have the President elect Trump taking his seat and as we approach I can see that some fear is increasing.
Hard to make any predictions really, just that we might see some heavy spikes and would rather wait it out. However safe haven assets might benefit and rally. Closed all my sell positions in Silver and Gold and will see where it goes.
the EURUSD seems to have printed a low and now making new higher highs, but we are still waiting for the outcome of the Deutsche Bank fine to be released.
The GBPUSD is creeping lower with lower lows and shows no signs of turning so far.
The AUSUSD started to recover yesterday but today made a new low at 0.7196.
The NZDUSD is forming a descending triangle pattern with support around 0.6890.
Despite my personal view of an overbought dollar, I can’t really say where it will break-out, what always matters is the current market sentiment and the dollar has room to go higher if the market players wish to drive it higher. Keep an eye on the major indices, S&P500, Nasdaq100, DowJones30 and you will find further clues where it will be heading these last days of 2016.
Until then let me wish you all a merry Christmas full of joy and health, surrounded by all your loved ones.
Stay safe and don’t overtrade.
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Long term account manager trading a diversified Forex portfolio compounding profits, seeking Financial Freedom and then use the 4% rule.
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