I’m delaying my vacation to trade this setup…
Dave Floyd is a professional FX and stock trader based in Bend, OR and the
President of Aspen Trading Group. Dave’s approach to FX combines technical
and fundamental analysis that results in trades that fall into the swing
trading time frame of several hours to several days. For a free trial to
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We have been well
positioned in the last few days in the FX market. You will recall
that we were short NZD/CAD from .8420 from 8/17 and covered today at .8250, we
also were short NZD/USD at .6940 and covered at .6910 and .6895 – all in all
solid gains. After that, I was ready to wrap up for the week and get serious
again after Labor Day, however, the large move lower in the Dollar Index (DXC)
this morning changes things dramatically. Let’s take a look.
We posted this chart last week and as you will
note in the yellow highlighted areas, the bull trend-line held well, this time
however, it is different. On the last two occasions the stochastics were either
oversold or on the verge of crossing back up – a good technical sign when
sitting on support. This time however (pink highlight) the stochastics are
crossing lower as the support level is being tested – in theory, this test is
being done with "fresh" momentum – not with waning momentum after a prolonged
move. This, we believe, will result in a break lower in DXC.
So what pairs would we look to to take advantage
of this scenario? As you know we only follow four pairs and their crosses,
GBP, AUD, NZD and NOK. Among those, the most
technically sound currently are longs in NZD/USD and shorts in USD/NOK.
As always, feel free to send me your comments and
questions.