Today we are going to be analyzing the U.S. Dollar Index. We have enjoyed a remarkable series of trades in this index, many of which you can see in our previous Q3, Q4 (2007) and Q1 (2008) trading results.
Before we go any further, let's take a look at what makes up the U.S. Dollar Index. The U.S. Dollar Index is a basket that consists of six foreign currencies. These are the Euro, the Yen, the Cable, the Loonie, the Krona, and the Franc. The index is made up of six currencies, but it includes seventeen countries. Japan, Great Britain, Canada, Sweden, and Switzerland are added to the twelve members of the European Union whom represent the Euro. These seventeen countries may only be a small percentage of the countries in the world, but there are many other currencies that follow the U.S. Dollar Index closely. The index is a great tool for measuring the global strength of the United States Dollar.
The components of the U. S. Dollar Index have a geometric weighted average. This is to factor in the fact that not every country is the same size, so each country is given an appropriate weight when the U.S. Dollar Index is calculated. The Euro accounts for a large portion of the U.S. Dollar Index, more than fifty percent. The other five currencies make up a combined total of forty three percent of the basket.
Watch Dollar Index video here.
In this short six minute video you will see exactly how we analyze and trade the dollar index using our "Trade Triangle" technology. We show you the exact time frames that we look at and the exact trend timing tools that we use.
Enjoy the video,
Adam Hewison
Co-founder of MarketClub.com
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Adam,
On the dollar index i see that you use the monthly triangles to show trend and you stated above that you use weekly for timing. It seems that you use daily for timing on your video.
Did I miss something? (wouldn't be the first time)
Thanks
David,
Thanks for your feedback. For the Dollar Index we use the monthly for trend and the weekly for timing. Hope this clears up any confusion.
Adam
Your trade triangles have the ability to track the smart money which is a very important edge.
The markets move in the direction of least resistance (both in direction and time), because the markets move on expectation of future events. If everyone expects 'a' to happen, then market participants position themselves according to that expectation, thus changing the future. 'a' may indeed occur but not in the time frame expected simply because of the positioning prior, and in actual fact will probably flush out the late comers before doing so.
Smart money know this and the fact that the trade triangles pick up their 'scent' is really an edge.
what happened to the double bottom no brainer on the euro yen trade video? Seems not to be playing out as expected.
Simon,
Thank you for your feedback. Not everything works out the way you expect it to the marketplace. If it did everybody would be rich and it wouldn't take any brains to trade the market. Diversification and money management are key to trading success.
Thanks,
Adam
Question: After reviewing your video in the dollar index - why do you use the monthly triangles for trend and weekly for timing on the dollar index? Your other charts use weekly for trend and daily for timing? Please explain
Simon,
Thank you for your feedback. We use the monthly triangles for trend and the weekly for timing because it is an index .This approach works better and keeps you in the market longer.
Adam