DXY or USDX on Pro Act Trader charts.
The dollar index is a good way of seeing how the dollar is fairing against the rest of the world on one chart.
Wikipedia describes it as…
It is a weighted geometric mean of the dollar’s value compared only with “baker” of 6 other major currencies which are:
- Euro (EUR), 57.6% weight
- Japanese yen (JPY) 13.6% weight
- Pound sterling (GBP), 11.9% weight
- Canadian dollar (CAD), 9.1% weight
- Swedish krona (SEK), 4.2% weight and
- Swiss franc (CHF) 3.6% weight
So how do we use it when trading, well you can actually trade the dollar index, but if you are trading other currencies you can see the pressure the dollar is putting on the world.
There is no point buying GBPUSD if the dollar index is in a strong uptrend, EURUSD is even more affected by it and the CHF trade follows it.
I watch the dollar index more than anything else in fact in terms of my trading. It really helps to make good longer term decisions.
I recommend this video (clicky)
EURUSD break hook and go.
Take a look at this from this morning.
At that point it bounced off and started retracing back into the trend, it had nicely squared up the candles from yesterday and so another sell went on at the top. Now there is no further news till 13:30 so it should float neatly down, also going for another 55 pips from where the white dot appeared as those traders (the big boys) will be looking for that.
At least 75 pips profit unless the news breaks it at 13:30, I will go flat before then (move my stop to $0) if I have not already moved it down.
Update – I didn’t have to wait long!
Well, I didn’t have to wait long…. – ofcourse this candle will need squaring up.
Now I want to see it below the next support. It’s a big move if it gets past that. Do not enter now it is too close to that target.
Note: I do not recommend beginners trade EURUSD, its a volatile old pair. In fact I’m only trading them because one of the trading competitions rewards you for EURUSD profits.