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Strategy Video: Measuring and Trading Conviction in USDollar and S&P 500

Strategy Video: Measuring and Trading Conviction in USDollar and S&P 500

John Kicklighter, Chief Strategist

Talking Points:

• Conviction can help determine whether a market is at risk of a reversal or more likely to hold trend

• Fledgling and mature trends - in fundamental and technical nature - are more likely to reverse

• The S&P 500 fits both extremes and the USDollar is a mix of conviction

See the DailyFX Analysts' forecasts for the Dollar, Euro, Pound and Gold through the 4Q on our DailyFX Trading Guides page.

What separates a sharp rally from a lasting trend? Conviction. Measuring the market's degree of confidence isn't easy; but there are methods to improving our estimation. Technically, the maturity of the trend and the 'severity' of its development are strong indications. Fundamentally, the presence and support of a dominant fundamental trend often plays a key role. In this weekend Strategy Video, we look at means for evaluating conviction and apply it to the recent rebound on the S&P 500 as well as the exceptional extention on the USDollar's impressive run.

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