US Dollar Reversal, And The Week Ahead!

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Keep calm and trade Forex through the dollar reversal.

This last week we saw some significant reversal activity in the Forex market. For weeks, the USD had pounded (no pun intended) on most majors with no end in sight.

The question on everyone’s mind: Can the USD reversal momentum continue, or is it just a knee bend before the next upward spike?

Consider The Technicals

Technically speaking, the charts are giving us some clear indications. But, unfortunately, it’s as clear as mud. On the one hand, it’s been vastly overbought these past few weeks, and yet, depending on your chart time, we haven’t gotten close to our first Fibonacci retracement level. 

Some indicators are showing overbought, and short-term ones are showing oversold. There is no solid answer, and it’s all about the process and discipline to follow what has worked more often than not and follow the rules. 

A drop toward trend support and a resurgence of buying will end the USD short-term decline, and a breakthrough of support will accelerate the fall. 

That’s why technical studies have always intrigued me. Sometimes, we can be so correct, and sometimes just so wrong. So, money and risk management are essential.

Money And Risk Management

Of course, if you have practiced proper money and risk management, you have planned your exit to minimize damage if you are wrong. But, on the other hand, when you’re correct, tighten up and set a realistic target objective. I know it’s easier said than done. At times, it can make the toughest of the tough weep. But nobody ever said trading was for the weak of heart! 

Right now, it’s a lot bigger than just technical analysis!

Upcoming Forex Trading 

We expect to see volatility in all directions in the next two weeks. For one thing, the USA mid-term elections are bound to rock the markets regardless of the outcome. In addition, bond rates are under pressure as inflation shows no sign of easing. Finally, the stock market recovery this last week has left traders wondering if the uptick will continue.

It depends on the news cycle and political outcomes, so the answers will unfold as the markets settle down and decide the direction.

The bottom line: This is an opportunity for us to take advantage of the current situation and make it work.

As always, our ForexSignal trading desk will observe the market closely for trade opportunities and keep you informed as they unfold.