DXY (USDOLLAR) – Double Trade – BUY – 8th September 2020

DXY (USDOLLAR) – Double Trade – BUY – 8th September 2020 (Closed)

Good afternoon team,

This weeks focus will be on the ECB meeting on Thursday. Expectations are that the ECB may jawbone the currency due to fears of the currency gaining to much strength in such a quick time frame. Jawboning is where the relevant party, generally a central bank, plays down the strength of the currency. Interest rates are expected to remain on hold, however traders will be looking to Christine Lagarde for future policy direction during her press conference. The FED in the US has already lowered their inflation targets, there is a possibility the ECB may follow them down the same path. With that in mind we may see a weaker EUR leading into the later stages of the week, therefore the USD could gain from the weakness. We will be looking to position on the EUR leading into the announcement.

 Technical Analysis

DXY Weekly Charts

There is a strong inclining trend line support.

DXY 4 Hour Charts

RSI is signalling a bullish divergence after a five wave structure lower. Based on Elliott Wave theory we may now see a three wave corrective structure higher.

1 Hour Charts

On the short term time frame we can see a potential inverted head and shoulders formation.

We are now looking to position in favor of the DXY anticipating a move above the neck line towards 93.90.

We are positioning two trades on this set up in case of a short term pull back towards support before another leg higher.

MT5 CODE: USDOLLAR

Trade Setup 1: BUY – Market execution, current price 9308 (focus markets), stop loss 9230 and take profit target 9390.

Stop loss: 78 pips

Take profit: 92 pips

Trade Setup 2: BUY LIMIT – Entry price 9250, stop loss 9200 and take profit 9390.

Stop loss: 50 pips

Take profit: 140 pips

If the market breaks above the 9330 level before activating the second trade please close out the pending order.

Trade Setup
BUY - Market Execution

Entry
9308

Take Profit
9390

Stop Loss
9230