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Chapter 27, Part I. Let’s Meet with Dollar Index. Page 6

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 26, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Commander in Pips: Yes, we can, but not only for the EUR/USD. Take a look at CHF/USD also:


    Chart #3 | Weekly USDX (Black) vs. CHF/USD (Maroon)
    [​IMG]

    The same divergences you can find here. By the way – pay attention to yellow rectangle. We see huge growth of CHF/USD that was not supported by USD weakness. This has happened right before SNB intervention. Although this is very hard to use in practice – divergence was really huge, but this could help you to not buy CHF, since something is wrong here.

    Pipruit: Really useful. In other words, the USDX is a barometer of US Dollar strength. So, if I see that the Index is growing, it means that the USD becomes stronger, and very probably other currencies in pair with the USD will become weaker or are becoming weaker. Significant move on the Index should be accompanied by similar moves on USD pairs. Also I can use it to search for possible divergences.



    Commander in Pips: Yes. Let me make just a small additional clarification. Since USDX shows US Dollar strength – it has the opposite direction with XXX/USD pairs and the same direction with USD/XXX pairs.




    P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please post themon the next page and Sive should answer soon.



    Note: FPA ranks are earned in the battles against scam, not in the classroom.
     
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