News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Bearish
GBP/USD
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/td5WA4hCZC https://t.co/lKvEMf4QRe
  • Weakness in equity markets continued last week as losses built and technical patterns hint further bearishness might be ahead. Get your #equities update from @PeterHanksFX here: https://t.co/GGVrB3r7if https://t.co/HPHUC8EG3o
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here: https://t.co/5uSWKoLkd6 https://t.co/q80wSAoxXP
  • There is a great debate about which type of analysis is better for a trader. Is it better to be a fundamental trader or a technical trader? Find out here: https://t.co/aVAzFypAg1 https://t.co/7mc19Gxrvm
  • #Gold prices succumbed to selling pressure as the US Dollar soared this past week What is #XAUUSD facing these next few days and can these fundamental forces extend its selloff? Check out my outlook here - https://www.dailyfx.com/forex/fundamental/forecast/weekly/chf/2020/09/26/Gold-Price-Outlook-Rising-US-Dollar-Sinks-XAUUSD-Will-Losses-Extend.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/gPhy0KoW3W
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/38gTDnpPbn https://t.co/Xtk5g4JQEB
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here: https://t.co/3Wked6GBOp https://t.co/SsUguHB39W
  • Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. Learn about psychological levels here:https://t.co/1oygcFMFNs https://t.co/aD1ZWhTWZp
  • The price of #oil may continue to trade in a narrow range as the rebound from the September low ($36.13) appears to have stalled ahead of the month high ($43.43). Get your #commodities update from @DavidJSong here: https://t.co/719LgjFmYG https://t.co/SSoqjONUzA
  • The Australian Dollar may extend its slide lower despite the planned easing of Covid-19 restrictions, as the market continues to price in an RBA rate cut on October 6. Get your #currencies update from @DanielGMoss here: https://t.co/HJpngnerzY https://t.co/g6X8ABQDwY
For a Few Dollars More

For a Few Dollars More

2011-05-17 12:25:00
Walker England, Trading Instructor,
Share:

TheUSDollar (Dollar Index) is a new offering from FXCM. This index is equal weighted aggregate of four major currency pairs and trades as a proxy for USD strength or weakness. This year we have seen a strong trend lower with our high established on January 7th at 10,251. A low was formed on May 2nd at 9,336 for a maximum decline of 8.9% on the year.

The GBP/USD pair is a key component of the Dollar Index. This morning UK CPI (Consumer Price Index) figures were released. As reported on the DailyFX Economic Calendar , results came in at 4.5% for the month of April, which were much higher than the expected 4.1%. Similar to our discussion on the Euro Zone yesterday, higher inflation numbers have increased speculation of potential rate hikes through the BOE (Bank of England).

USDX_body_Picture_1.png, For a Few Dollars More

Price Action

Currently the USDollar is only available for demo trading with FXCM. Register HERE. As such, we will trade the GBP/USD pair today as a proxy for USD weakness. I incorporated a 4hr chart on the USDollar with a GBP/USD overlay so we can see the inverse correlation between the two charts. As we can see, as the GBP/USD increases in value the USDollar declines. With the USDollar finding resistance, a selloff would allow us to begin looking for buy entry’s on the GBP/USD pair.

USDX_body_Picture_2.png, For a Few Dollars More

Trading Opportunity

My preference is to buy the GBP/USD as a proxy for the USDollar. Entry orders may be placed between the 1.6200-16150 support ranges. Stops should be set below the May 5th low of 1.6090. Limits can be set at a minimum of 200 pips away giving us a clear 1:2 Risk/Reward ratio.

Alternative scenarios include price of the USDollar breaking resistance. This would change our bias in the market and allow us to begin looking for selling opportunities on the GBP/USD.

Walker England contributes to the Instructor Trading Tips articles. To receive more timely notifications on his reports, email instructor@dailyfx.com to be added to the distribution list.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES