{"id":20721,"date":"2023-03-20T07:30:03","date_gmt":"2023-03-20T11:30:03","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=20721"},"modified":"2023-03-20T07:30:03","modified_gmt":"2023-03-20T11:30:03","slug":"how-to-trade-a-surging-dollar","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/how-to-trade-a-surging-dollar\/","title":{"rendered":"How to Trade a Surging Dollar"},"content":{"rendered":"

The world’s reserve currency has surged once again…<\/p>\n

On February 20, I wrote about an imminent dollar rally<\/a>. Since then, the dollar index (DXY) has climbed as much as 4.98% off its February lows.<\/p>\n

This move is even more proof that the volatility in currency markets isn’t going anywhere.<\/p>\n

And that’s fantastic news for currency traders. More volatility equals more opportunity.<\/p>\n

So today, I’ll share the parameters I’m working with to trade the dollar’s next big move…<\/p>\n

A Muddy Chart Is Revealing a Strong Trend<\/h2>\n

Sometimes a market’s chart is very clear. The direction of the trend is undeniable, and trading is smooth and effortless.<\/p>\n

This was the case for DXY back in late February. However, now the picture is a lot muddier.<\/p>\n

Since topping out on March 7, DXY gave back almost 50% of its gains before shooting higher.<\/p>\n

Let’s take a look at an updated price chart of DXY to see what’s going on…<\/p>\n

<\/p>\n

\"Image\"<\/p>\n

To track intermediate-term trends in the market, I like to use the 20-period moving average (MA – green line) and the 50-period MA (purple line). These indicators hold the key to DXY’s future.<\/p>\n

After DXY bottomed in February, notice how the two MAs crossed to the upside and prices stayed above the averages as well. When a strong trend is in place, this is exactly what you want to see.<\/p>\n

However, after hitting my first target of 105.24, prices have broken below both MAs and the 20-period MA has crossed below the 50.<\/p>\n

Although this doesn’t mean dollar strength is completely exhausted, it does make trading the dollar slightly more complicated.<\/p>\n

<\/p>\n

\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/p><\/div>\n<\/div>\n

<\/p>\n

My analysis shows me that the buck is still likely to move toward higher levels. As such, my second target for DXY (107.47) remains in play.<\/p>\n

And to manage risk on this trade, it makes a lot of sense to move any kind of stop loss just below the March 14 low of 103.44.<\/p>\n

If the dollar breaks below 103.44, then the odds that the rally is finished would increase substantially. Such an event would likely see the buck re-test the February lows of around 101.<\/p>\n

I expect currency markets to remain highly volatile, especially with the Fed’s most recent interest rate statement coming out on Wednesday.<\/p>\n

If you’re trading this week, be smart. Keep your position sizing in check and focus only on the best opportunities.<\/p>\n

Happy trading,<\/p>\n

Imre Gams
Analyst, Market Minute<\/em><\/p>\n

<\/p>\n

\n

READER MAILBAG<\/h2>\n<\/div>\n

What are your predictions for DXY?<\/p>\n

Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com<\/strong><\/a>.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

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