{"id":22037,"date":"2024-08-02T07:30:28","date_gmt":"2024-08-02T11:30:28","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=22037"},"modified":"2024-08-02T07:30:28","modified_gmt":"2024-08-02T11:30:28","slug":"pay-attention-to-what-is-setting-up-in-the-dollar","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/pay-attention-to-what-is-setting-up-in-the-dollar\/","title":{"rendered":"Pay Attention to What Is Setting Up in the Dollar"},"content":{"rendered":"

Managing Editor’s Note:<\/strong> Today, we’re handing the reins over to colleague Larry Benedict – a market wizard and legendary hedge fund manager.<\/p>\n

He’ll talk about how, while everyone is paying attention to inflation, interest rates and the jobs report’s impact on the stock market…<\/p>\n

They’re missing out on an even bigger trading opportunity – the currency market.<\/p>\n

Here’s Larry with more…<\/p>\n

\n

Inflation, interest rates, the jobs report…<\/p>\n

Investors pore over economic data and watch the Federal Reserve’s every move to figure out the impact on the stock market.<\/p>\n

But if you’re only paying attention to stocks, then you’re missing an even bigger trading opportunity.<\/p>\n

That’s the currency market.<\/p>\n

Roughly $7.5 trillion in currency trades happen every single day. So in just 17 days, currency trades equal the value of the global stock market’s trades across an entire year<\/em>.<\/p>\n

And currency moves can lead to fast profits – if you know how to trade them.<\/p>\n

I’ve been trading currencies since the 1980s. And over my 40-year career, I’ve traded nearly a trillion dollars’ worth of currencies.<\/p>\n

So I know when conditions are shaping up for a profitable move. And right now, one is lurking around the U.S. dollar…<\/p>\n

The King of Currencies<\/h2>\n

The U.S. dollar factors into nearly 90% of all foreign exchange transactions, making it the world’s dominant currency. (Foreign exchange, or “forex,” is just another way to refer to currency trading.)<\/p>\n

That’s why I trade the dollar against other currencies like the euro, the Japanese yen, or the British pound.<\/p>\n

It’s also why I pay close attention to the U.S. Dollar Index (DXY). The index tracks the dollar’s performance against a basket of other currencies.<\/p>\n

And DXY’s chart can tip off the next big move.<\/p>\n

As you can see, the dollar has been trading in a wide range going back to the start of 2023.<\/p>\n

<\/p>\n

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

I wrote this about the dollar’s chart back in April:<\/p>\n

\n

DXY peaked in September 2022 at its highest level in over 20 years (shown with the arrow). Yet the dollar pulled back toward the 100 level into February 2023, starting a downtrend.<\/em><\/p>\n

And since then, the dollar has been trading in a wide sideways range.<\/em><\/p>\n

The 100 area remains support (the lower green-shaded area) while resistance rests around the 105 to 107 level (upper reddish-shaded area).<\/em><\/p>\n<\/blockquote>\n

Since then, DXY has stayed in that range, as you can see in the chart above.<\/p>\n

But I don’t expect that will be the case for long.<\/p>\n

DXY is hinting a big move is on the way…<\/p>\n

<\/p>\n

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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

Coiling for a Major Breakout<\/h2>\n

Let’s zoom in on the more recent time frame for DXY.<\/p>\n

Notice the dashed trend lines on the chart below. It shows a triangle consolidation pattern.<\/p>\n

<\/p>\n

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

The sideways trading range keeps getting narrower. We call this “coiling.”<\/p>\n

And it means the battle between the bulls and bears is getting more intense.<\/p>\n

Each side is stepping in more quickly to push the dollar back in the other direction.<\/p>\n

Eventually, one side is going to win out, and it will deliver a big move in the dollar.<\/p>\n

While this tension is building, it’s not yet clear whether DXY will surge or slump. So we need to wait for it to break through one of the trend lines.<\/p>\n

Then the Relative Strength Index (RSI) needs to confirm the move. You can see its action in the green line of the bottom panel.<\/p>\n

If the dollar breaks below the lower trend line, we’ll watch to see if the RSI pushes below 40. That would confirm strong price momentum to the downside.<\/p>\n

On the flip side, if the dollar moves above the upper trend line, we want to see the RSI rise above 60.<\/p>\n

Whichever way the dollar decides to break, I expect a strong move to follow.<\/p>\n

Happy Trading,<\/p>\n

Larry Benedict
Editor, Trading With Larry Benedict<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

If you\u2019re only paying attention to stocks, you\u2019re missing out.<\/p>\n","protected":false},"author":55,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[58],"newsletter-type":[],"ticker":[],"class_list":["post-22037","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-larry-benedict"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/22037","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=22037"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/22037\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=22037"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=22037"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=22037"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=22037"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=22037"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=22037"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=22037"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}