We need to remember that the last week’s US Federal Interest Rate hike was already accounted for by most analysts and traders. What the Markets were looking for was any prompts about the next bouts of an Interest Rate hikes. This did not happen and hence the Dollar took a dive.
What is next for the Dollar?
While most traders remain in a swamp of confusion, Platinum Analysts have a very clear longer term vision. We still strongly believe that there will be three Interest Rate increases this year. The notorious Fed have always been of the nature to act when the pressure builds up. Believe us when we say that this the pressure is on! Markets and the economy are currently behaving and are in a very good shape. The Fed will be observing the same and act accordingly.
We expect a surprise hike in May 2017. As traders, we should try and understand the current situation on the Dollar. Take maximum advantage of the current profit taking move on the Dollar.
In the previous article about Trading the FOMC Rate Decision, we discussed three different scenarios and how to trade them. One of the scenarios was what if the Fed increases the Interest Rates on the day and does nothing else. We expected an initial spike and a profit taking selloff. That is exactly what happened!
CHART AND TECHNICAL ANALYSIS
If you are new to Forex Trading, below information might seem difficult to comprehend. Do not hesitate to book a 30-minute skype or phone session with one of our mentors. We will give you a free Introductory Technical Session where you can learn some simple tricks of trading the Forex Markets and few Price Action Strategies that could make you profits from day one.
The Platinum Chart says it all:
A) We have a Head and Shoulders Pattern in play which will complete at 99.15.
B) The Intraday Mini Trendline has been broken and this is Bearish for the Dollar Short Term.
C) The Intraday Longer Term Trendline is clearly intact and hence we remain Bullish.
D) The Trap Range on the Dollar remains between 103.60 and 99.15. We believe this will hold over the next 30 Days.
Overall, it may seem like the Dollar has been capped at 103.60. However, this not the case especially if you follow the Platinum Methodology using Institutional Strategies. Think like the top 5% of the traders.
HOW TO TRADE THE DOLLAR INDEX
The most suited pairs to trade using the dollar are the Euro and Swiss Franc.
A) Place an alert at 99.15 as mentioned above.
B) When the alert triggers, check the prices of Euro and Swiss Franc and SELL accordingly. We expect the Dollar to bounce at least a 100 points from this level if not more.
C) Place no more than 40 pips stop loss on the Swiss Franc and Euro. Aim for 200 PIPs profit.
EURO – The EUR is approaching the all-important level of 1.0850. This will be a short-term retracement level. It is also the top of our all-important Trap zone becoming an Intraday Short Level.
YEN – The JPY has failed to hold up so far due to higher yields. The all-important figure for us to watch on the Yen is the 111.50 level. Watch the cross pairs such as EUR/JPY and GBP/JPY for breakout trades.
CABLE – As usual, GBP is always full of surprises. Quite a rally from a fundamental perspective. If an intention to increase rates would have been shown then we could have actually started positioning for longer term positions. For now, we remain Bullish Intraday on the pair.
SWISSY – CHF is stuck in range. Watch the all-important 0.9850 level like a hawk as this will yield you some easy PIPs.
The AUSSIE, the KIWI, and the CAD have also lined up perfectly.
Together, the Dollar Index provides us with seven trades that could make 150+ PIPs this week.
I would end up turning this blog post into a full chapter if I continue to write details about each indicator and trade opportunities info. Hence, I suggest that you click on the button below and book a FREE Skype or phone session with one of our senior traders to discuss details about the trades.
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The Platinum Way
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Hopefully, you have enjoyed today’s article. Thanks for reading! Have a fantastic day!
Live from the Platinum Trading Floor.