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DXY (dollar index) and EUR/USD – What is going on? November 23, 2017 (Happy Thanksgiving)

What is going on with the Forex Market?

We figured that we would explain with the help of a short video what is going on with the market. On November 22nd (Wednesday) we stated we saw SSU (stair step up) pattern on DXY, it is usually a pattern that indicates a fast move up (bullish), however, once FOMC open their mouth, things went the other way, why? Let’s start with a short video (3 min and 19sec).

To understand why DXY all of a sudden fell you have to look at what FOMC said, they did not give a strong indication of a rate hike for December and stating they are worried about inflation, this had an effect on the market but the move wasn’t all that odd and can be explained by just going back to our Forex Forecast report on November 17th. We talked about DXY having a pinbar that week but that it wasn’t fully qualified, additionally, on November 17th, 2017, we also stated that we think DXY will reach down to the MEDIAN price (93.23).

DXY ended up only reaching down to 93.50, guess what was sitting there?? A bullish order block exists at 93.50, it took off from there and a day trade would have been a great setup for our readers and would have banked short of 70 pips on that Monday, November 20th, 2017. Now, on Tuesday, November 21st is where things started to turn, we had called for DXY to climb to 95.50 but it stopped at 94.17, why??

Look Left (always)!

To understand why, we had to first market 94.17 (orange line) and then switch out to weekly tf (timeframe), see all of the circles we made on the image below? We missed looking left, if we had done that before we published our report, then we could have told you that it would turn at 94.17 level, we usually don’t miss things like this but, we are humans as well and something distracted us that day, not sure we recall what right now but again, we can make mistakes as well.

Explanation of DXY (dollar index) and market moves over the past week in November of 2017 that caused confusion with our readers.

Explanation of DXY (dollar index) and market moves over the past week in November of 2017 that caused confusion with our readers.

What’s Next?

Now DXY is going after the MEDIAN price that we called out on November 17th, a move that it never finished. DXY has now completed the touch of the MEDIAN price, so what will happen now? We believe DXY will reach down to cash out liquidity pool at 92.47 (92.40) (see image) and then go up and cash out the other liquidity pool at 95.50. However, it is sitting at median right now, it can reverse the move and cash out at 95.50 first and then down to 92.47 (92.40). Ok, I can hear you now, how do we tell? Well, you have to keep an eye on what happens over the next daily candle, I know you are afraid of losing out on a trade, however, don’t be because you know what will happen at those 2 levels that we have called out. You will lose if you chase the price, let the price come to you, that’s how you win more trades and lose less.

Explanation of DXY (dollar index) and market moves over the past week in November of 2017.

Explanation of DXY (dollar index) and market moves over the past week in November of 2017.

Conclusion

If you think the market isn’t acting according to certain set patterns and that news events are what creates market moves, then you are missing it completely. You need to think like institutional traders and smart money does, only then will you stop chasing the price and just wait for it to come to you. Once you start doing that, well, then you will really see a change in your trading and profits.

About Chris

Chris Wittusen started trading in early 90's, mainly in stocks but is now mainly trading in Forex (currency trading). He also manage a successful Forex group on Facebook, where he shares his knowledge to other people that want to learn more about how to trade in Forex. His technique still applies to both Forex and Stocks due to his style of naked chart trading along with box trading.
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