The One Thing That Could Reverse The Dollar
In
yesterday’s column I mentioned that the
dollar was sorely needing a close above 89 in order to re-establish some upside
momentum….while this was the case in early Asian trading, it soon become clear
that 89 was not going to hold as traders came to their desks for the London
session. Within hours the Dollar Index (DXC) traded down to 88 after slicing
through the 50-day EMA at 88.50 with still no signs that the downward momentum
has subsided.
While the payroll data on Friday may very well
reverse the price action, we need to pay closer attention to some key technical
levels in order to make a proper assessment. For now, our focus is squarely on
the levels in the chart below.
While the following trade idea goes against the
overall philosophy I adhere to while trading – always trade with the trend – I
believe with all the resistance levels approaching on NZD/USD as well as a
deteriorating macro back-drop that this swing trade offers a solid risk- reward
scenario.
As always, feel free to send me your comments and
questions.
Dave Floyd is President of Aspen Trading Group, which provides research/trade
ideas on the FX and equity markets as well as analytical software. Aspen Trading
Group is based in Bend, OR.
Â
Â