US Dollar 2012-06-05

I have decided to attempt a long trade in the US dollar index. I have bought the June contract of the USDX at a price of 92.47 at 00:04 hours. The trade is based on the strong uptrend on the daily USDX charts, but the entry was made using a 60 minute chart by means of spotting a bullish MACD divergence. This occurred during a pullback in prices.

I had made a previous trade this evening for which I have not made a blog entry. It essentially the opposite of this current trade. I had shorted the USDX on open as it had gaped down about 0.20. I though perhaps it could continue trading lower, but it became apparent that it would now. Rather, the MACD divergence I am trading now became evident. I wound up taking a loss of 0.05 on this erroneous trade.

Following is a 60 minute chart for the June contract of the USD index.

What we are observing is a steady decline in prices following Friday, June 1st's sharp decline. Prices reached lows of around 82.40. Meanwhile, the MACD histogram made successive higher lows as prices declined. This is an MACD histogram divergence, and it is providing me with a buy signal. I waited until the MACD moving averages crossed before buying, which is indicated by yellow arrows. As usual, a protective stop was placed to avoid tragedy. I will be moving this stop upwards in a trailing manner as the trade moves in my favor, assuming that it does.

What I will be looking for in this trade is for prices to reach or exceed the previous high, or at least make it towards 83.50. I am hopeful that the previous high of 83.67 will be exceeded. As an exit strategy, I will be looking for an MACD divergence top on the daily and 60 minute charts. I will also be trailing my stop about 0.20 under the moving average that I am using. So, whichever of the three comes first will be my exit mechanism for this US Dollar trade.

I've been going on about sugar lately. I'm still looking for a buy entry, but I think I'm going to back off a little and sit back. But I am still waiting for an opportunity to go long sugar. Another trade I've been looking at is the AUD/USD. The Australian Dollar is starting to look quite appealing.

I am getting more and more bullish on gold. However, I am still exercising patience in this market. I will wait for more strength, and then enter on a pull back. If this fails to occur, then too bad for me. I am watching gold quite carefully now, and my opinion starting to crystallize. I hope it works out the way I'm leaning, because it could be a nice long run.

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