Dollar Index Damage

Daily Chart of the US-Dollar Index

I have been using the 50 period simple (moving average) to gauge trend and one of the clearest forms of trend change came 9/27/2017 when it sliced through the 50 decisively and then continued marching higher until 12,097 about a week ago and then spend more time declining

The first arrow in yellow points out how fast price pulled back at the test of 11,900 and it was just the signal the dollar bulls needed to drive it to its price objective of approx. 12,100 there were plenty of sellers ready and willing to acquire Euros, Aussies, anything anti-dollar

The green rectangle acts as a buffer inbetween range points to tell whether levels are working as support or resistance and in our case right now its supportive at the upper border of the box at 11,962 that is also in close proximity to the second mean reversion [today's touch of the moving average]

Today's powerful bearish candle is exciting and somewhat climactic for the low volume trading environment of the Thanksgiving week, but it could be seen as a warning given what has happened to the dollar for most of this year.  

The Ebb and Flow

It may appear wonky on this daily chart that the Euro just acts the way it wants and can seem unpredictable in how it ranges and "breaks out" that if it does decide to trend in a particular direction the snap backs are vicious and it would appear to lack respect for support and resist points. 

So if any pattern can be gleaned off the charts here the price action points out how its been acting since 9/11/17 and by this we are talking about how it acts on the daily chart

• The mini peak at 1.20804  allowed for reversals and continuations to the downside which were longer in height and intensity (more powerful sell offs)
• The throw backs to the upside retraced 50 to 65% of the dominant move down, so it would give the impression that the path of least resistance was to the upside, ESPECIALLY on the bullish candle we printed on 11/14/2017 last week's push was slightly deceiving 

The swings have been one way or another, so in my view it doesn't act well in the sense that it wonks around and has more of a bulky and rectangular action, which is ok with excellent setups and a good feel for where we are at this point in trend

This sell the rally and buy the LOWER dip is still a good practice to have when the dollar index lurches higher here and there.  

Ideas on Trend Change Confirmation

I am throwing this back to when I was measuring the Dow 30 in terms of its geometric and area based facts.  It made its way all the way up to 23,619 and since then attempted to reclaim that level once at 23,565

The two shaded ovals denote where there is some buying action, meaning the discount of the yearly highs was quickly bought up; they sopped up the low prices with a decent amount of deman

Being that the price was tarnished already: 23,247 it could be relatively stale going forward should we decide to claw through that level and continue trending to the downside [descending trend line captures most of this pullback]

I don't know how fast or how much lower things can go but on the daily chart the pattern is beginning to emerge. 

• We have undercut several lows
• The highs are being wiped out by a bigger amount of sellers

The confidence in short selling will return at least that is how the charts are acting.  

Scalping Counter Trend AUD related pair

Reason for Buying Aussie Dollar AUD/USD

1. Bullish reversal candlestick: Hammering in a potential bottom for the short term

* could prove to be a weak Bullish Candle

1. Climactic excitement on the two hour time frame of a 60 pip drop from a opening candle of 0.76310 to 0.75739, possible short squeeze 
2. Pre-set targets hit for low prices sought out, I was looking at these levels before as in buying near 75, bottom fishing at the lower points, dollar continued trading weaker for other parts of this morning 

I don't see much reward in this trade but it will be interesting to see how it acts along with the Dollar Index.  

Points of Exit and Hitting Targets

For the times that I have flirted with VXX and had profitable trades they were mainly on closing a big portion of shares like 50% and 75% in that day.  So in the end of this post I will discuss targets and the strategy for getting out at optimized levels.  

• This type of trade needs to be hedged with XIV or other short volatility instruments for the longer holding periods
• Opportunities are very short lived because of how quickly it changes in a reaction greater than the broad market

At first glance its really obvious this is a negative and bearish chart pattern.  But, I feel as though there is an opportunity here.  These are the technical reasons

• The exhaustion from short sellers of volatility has reached a semi-climax (not absolute) but there is reason for them to pause and the amount of time gone by has been tremendous, there is going to come a time when price reach equilibrium and now its so low on the curve its about time for another phase of the cycle to kick-in where volatility turns higher
• The inverted dome:  the price pattern shown here shows two main turning points 33.67 and 33.19 with 33.19 being the most recent, the tightness of its trading range is another clue as to why price ranges should begin expanding again 
•   In spite of the color of today's daily candle, it still turned much higher at the end of the day and made for a lot of excitement and bullish price action so the CLOSERS ended up driving it higher than yesterdays close [higher highs and higher lows]
• 10/25/2017 the entire range was 3.37 with the quick burn out from the days highs, this type of movement can repeat itself but with how well coiled price is I expect more of a 3.8 or 4.0 point move
• Volume is terribly low, non-confirming for the volatility bears

Points of Exit for long positions

• 40, or just a few notches higher
• Absolutely 47.5 - 50 and these are for the next few weeks
• Lastly if it moves so much faster than I can anticipate then I would look for the previous price spikes from August 8/10 and 8/16 and the mid June levels if they could be revisited

2017 Juggernaut more than most people thought possible, the Top or Not?

The way I would like to organize the data regarding trend is I have a tendency of framing price action [for bullish continuations] in terms of Rally-Consolidation- Rally where it spends time basing inbetween before the next rally

Intra-day high printed at 23,177

I also would favor trading a bearish scenario where price drops quickly, tries to hang on to some gains, rallies back, bases and drops again.

But since most of the spring, summer and fall of this year, the pattern has been very consistent.  So I shaded the "character" of the underlying move.  That is to say that each of the rallies are boxed in with mainly bullish (daily) closing candlesticks and the corrective waves are mostly red and longer bodied bearish closes. 

I won't cite each date from start to finish, but the color-coding should do the trick.  The uptrend here is definitely in tact, so I would react differently in coding a way of trading things in an environment where falling prices yields profits.  That is not the case yet, even though corrections are a natural function of the stock market. 

The Expansive Thread

Focus of a series of videos - this one should be very long, and it has to do with a positive, neutral, and negative market cycle.  How these things affect market price behavior

1. Time and Volume 
2. Direction and Duration (how much time it spends in said direction)
3. The fractal nature of how things change; and the internals of how the buyers dictate the market

That image is one of the DJIA - Dow Jones Industrial Average and it captures a snapshot of the kind of comparison studies we are doing.  It is a visual guide to how price behavior acts during uptrends [its geometry] and how effective downtrends are in their swift actions

-Damian Richardson