Yesterday, I uploaded some trade plans which outlined the levels of resistance a bear would sell at using price action and weekly pivot points on the Dollar and Yen pairs. As far as theory is concerned those trade plans make total sense as the trend is currently Dollar and Yen strength and as a bear, you would sell at resistance (WPP or WM3). Though what if I am expecting market dynamics to be the same this week as last week and for Dollar to continue being strong and markets to continue being risk off without considering if I might be wrong.
There are good fundamental reasons for the Dollar to be weak and when looking at the COT report you will notice that no one was buying Dollar last week – it was profit taking. If Dollar bears are going to get back in they would do so at an obvious level of resistance.
Looking at the daily charts for all Dollar pairs, Oil and Gold, the market is at a price where one would expect to see Dollar weakness. If the Dollar index makes a lower low off MM3 then it’s time to realign satellites.
I am keeping a close eye on the line in the sand on all the pairs and am therefore very clear on the price the market needs to break above to make a higher high on the Dollar and Yen pairs. Until then I continue selling lower highs. No setup. No trade.