In this post, we have helped you to take your Forex Trading to the Next Level through our professional approach on how to Trade EURO Dollar (EUR/USD) by having an eye on US Dollar Index (DX). Let us first explain, what is US Dollar Index (DX).
We have a concept of the US Dollar Index or US Dollar Basket in foreign exchange trading. This Basket is a composite index comprises of 6 currency pairs which are traded with US Dollar directly. These 6 currency pairs are as below:
EUR/USD (Euro), USD/JPY (Yen), GBP/USD (Sterling), USD/CHF (Swissy), USD/CAD (Loonie) and USD/SEK (Swedish Krona against US Dollar).
US Dollar index is an important instrument to know and look for if you are serious about your forex trading. You can also trade this US Dollar index as an instrument in some broker platform. US Dollar index can be represented graphically as below:
Now the question is how you can take your Forex Trading to the Next Level through our professional approach on how to Trade EURO Dollar (EUR/USD) by having an eye on US Dollar Index (DX). This is illustrated in the following two daily charts. The first chart is for EUR/USD, in which we have plotted a 200-period exponential moving average (EMA) along with the price bars of EUR/USD currency pair as shown below. One way to consider bullish and bearish BIAS of a tradeable instrument is to observe whether the price is plotting above its 200-period exponential moving average or below its 200-period exponential moving average respectively. Once we have identified the BIAS then only one thing is left out to observe and trade the Bounce or Breakout of the tradeable instrument from its 200-period exponential moving average.
As we always say, that Price can and will do whatever it does. But to stack the probability in our favour, we can combine the movements of EUR/USD and US Dollar Index (DX). Below chart is for EUR/USD with the 200 EMA in which we can observe that EURO price bars actually did not bounce from the all-important 200 EMA on 10.01.2019 and 31.01.2019 as shown below:
After observing that EURO price bars actually did not bounce from the all-important 200 EMA on 10.01.2019 and 31.01.2019 we now go and refer to US Dollar Index for the same 2 said dates and see that US Dollar Index has actually bounced from the all-important 200 EMA on 10.01.2019 and 31.01.2019 as shown below:
EUR/USD and US Dollar Index, when put together, gave us the additional confirmation on how to take the 2 bounced trades for EUR/USD from the all-important 200 EMA on 10.01.2019 and 31.01.2019.
Now you must be wondering how you can take your Forex Trading to the Next Level through all our professional approaches. To take your Forex Trading to the Next Level through all our professional approaches and to find out the answers to all your Trading related queries, please contact us at 03 9566 7275 and book your FREE discussion session for 30 minutes at Level 3, 2 Brandon Park Drive, Wheelers Hill, Victoria 3150.
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