Welcome to TheLFB's review of the dollar index, and the review of the most dominant of global currencies. The dollar touches every part, of every global market, every day. It is the unit that central banks rely on as a reserve currency, and is the vehicle used to trade all global commodities on international markets.This is straight forward and easy to follow, but most importantly it is very concise. Check the member's Market Outlook area on a regular basis for guidance on what pairs look to be moving, and why.
Best Moves: After 20:00 EST
Updates: Posted every 4-6 hours |
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(1).jpg "TheLFB Mixed Signals") Trading Range
(ATR) |
.jpg "TheLFB Long") Price Action
(RSI) |
Daily Trend
(SMA) |
The index trades through the inter-bank Markets. The Index was developed in March 1973, and its value is a reflection of the value of the Usd now, compared to what it was worth in 1973. A read of 75.00 on the Index equates to the Usd value being 75% of what it was three decades ago. The weighted index of other currencies against the dollar give a fair reflection of the overall market sentiment towards the greenback. Most professional traders look towards the Treasury yield and dollar index activity to gauge their dollar trade potential.
The index is made up of Euro 58%, Yen 13%, Pound 12%, Canadian 9%, Swedish Kroner 4% and Swiss Franc 4%.
The Usd is on 90% of all currency trades, it is the world's dominant forex currency. The euro is now making up 50% of those trades, and 58% of the actually dollar index; one cannot move very far without automatically impacting the other. The Swiss franc is the gauge of market sentiment, and normally makes moves ahead of the euro and pound. It is a reliable source of market direction and momentum, but makes up the smallest part of the Index.
The yen and the pound make up the balance of the dollar index, along with the Canadian dollar, the Swedish kroner, and the market is now just making room for the aussie. The euro is referred to as the Common Currency, and is looking to challenge the Usd cash Reserves of those central banks that also hold natural reserves of either Oil or Gold. Why hold a Usd denominated commodity priced in dollars, and hold Usd notes as well in the vault? The euro may be the answer. Normally a higher dollar index equates to euro and equities lower, and vice versa.
Trade Plan Management:
Trade in-line with the 4 Hour trend, or reduce lot size.
Close 50% at @ Target 1. Move the Stop to Entry at Target 2 and close 25%.
At Target 3 close out balance if the U.S. session is ending, or move Stop to Target 2.
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Moving Lower: |
.jpg "TheLFB Short") |
Mixed: |
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Chart Link: |
.jpg "TheLFB Elliot Wave") |