Bearish US Indices not good for the US Dollar?

Hi Traders,

Today I want to write about something that I said on my Twitter about bearish indices. I wrote on my Twitter that bearish indices can affect the US Dollar to the bullish side. Many people wrote to my saying that they do not agree and think that with Indices getting a hit, USD will follow.

After getting all this emails and tweets, I decided to go to my charts and look the history between $SPX (SP500) and $DXY (Dollar Index) and here is what I found out:

(click on image to expand - SPX + DXY Weekly)

Above you can see both markets together in one graph. We can clearly see that every time $SPX had a correction, it gave the USD a lift. But why this time we are not seeing a USD jump? I think it is because the Rate Decision next month and the market is quite divided if there will be rate increase or not.
However, I recommend you to have a look into my last post regarding the $USD for you to know where we are at the moment (very important). 

With all these news regarding China and money getting out of the market, I still bullish $USD at the long term, does not mean I am buying everywhere.. but it means that I am buying at really selected levels.

By Thiago Duarte
Chief Strategist at Duarte Investment Group 
thiago@duarteinvestmentgroup.com 
@thiagotrader 

Don't trade the noise, trade the levels ($USD & $EURUSD)

Hi Traders,

Today (24/08/2015) we have seen HUGEEEEE moves on Forex, Indices and other financial markets. European markets faces the biggest loss since 2008, VIX surged by 67% today and according to The Guardian; ''Hundreds of billions wiped off world’s financial markets today''.
With all this news coming out every where and big sell off happening on Indices it makes us forget about trading the levels and only trade the noise. This is a big error for your results in the long term, no doubt, you can make very good pips in a very short time but for the market to bring you in and then reverse hard is very easy... Also another error as I already said, with all this media noise and big movements it makes us scared and especially: forget the levels.

As everyone today was speaking about $EURUSD reaching 1.1700, $GBPUSD reaching 1.5800 and $NZDUSD nearly 0.6200.... I was looking at the $USD Index (DXY) and thinking: is this the real top? Where all the big institution looking at?... So thinking about these questions and others.. I jumped into the $DXY Monthly chart and saw this:

(click on image to expand)

By looking this $DXY monthly chart, we can see that today we touched the 2005 high at 92.63 which also has the 1.618% fib very close. For me at least, 1.618% is a very powerful fib level which I sometimes use to trade against when we reach there. Now observing the RSI, we can see that is going down (following the price action) but is going very very slowly which makes me feel that this can be a correction.

Now jumping into the Weekly chart, is even more interesting:

(click on image to expand)

Looking at this chart straight away I saw a formation here: Bullish flag. After a very powerful move that we had last year until March this year, it is normal for the market to calm down a bit before any big move. So when the market wants to cool down, many times he makes a formation such as; channel, flag, triangle, range and others... and I love when any of these formations comes into play because it gives me an idea of when to buy (level) and where my risk is and also shows me that soon (can take days, weeks or months), it will continue the trend that was having before getting into the range.
Please, do not confuse yourself with formations, we have 2 types: continuation formations and reversal formations... Above I just spoke about the continuation ones..
Anyway, so there is maybe in flag in play in this chart, also 61.8% very close too and pitch fork line (I only put pitch fork on 30mins graph, but this one is working perfectly with price action). Looking price action, is in a very very 'rangy' mode here, not moving anywhere which is the perfect price action in flag. Looking the RSI now, is not giving any strong alert at the moment, but will be very interesting to see him breaking that big down trend line.

Now let's look the daily chart:

(click on image to expand)

Looking at the daily chart, we can see that we are creating a triangle here and as I spoke above, it is another continuation pattern/formation on price action. Also, today we touched the 0.382% fib (first fib level) and is holding very well until now. RSI don't have anything there at the moment, will only give us any alert when we brake that trend line. So, today I want to see the close above the triangle support line (93.06) to give more support that this is not breaking today.

Now let's look at $USDOLLAR 4hr chart as I don't have the access of the $DXY 4hr chart, but it is the same thing:

(click on image to expand)

Looking at the 4 hour chart (short term view) we can see that we touched and crossed by few points the 261.8% fib (last fib) today of the fib connecting the range high (12071-11065). Looking at that candle is not so bearish, nearly at the top of the candle (I will update about this candle on Twitter). On RSI, its nothing there until we cross the 30 line and close above. 

Conclusion on $USD charts:
Looking at all this charts is not making me sell even though we had a very bearish day. Ofcourse, if you look at the 4hr and Daily is very bearish very now, but if you look at the big picture/long term (more important), we can see that we are in a consolidation period on $USD after 20% jump which is normal. So lets not forget about that flag. However, looking at the $DXY weekly, we can reach 92.18 (61.8% fib) and 92.00. So maybe there is this risk but we are very close to that price and I will trade this to the long side just when I can see that the Risk/Reward is on my side.

Now, lets look another pair which can help us understand better the price action and what the banks/institutions are looking at. Let's look the $EURUSD Monthly chart:

(click on image to expand)

Looking the $EURUSD Monthly chart above, we can see that because of the jump on $USD, the $EURUSD went from 1.4000 to 1.0461. To get into that low he broke many trend lines and more especially; that trend line on RSI (that was big!). However, right now we are going higher but we still did not reached the 61.8%. Very 'rangy' here too which makes me think the same thing that I am thinking about the $USD; is he cooling down for the next move?

Lets go to the $EURUSD Weekly:

(click on image to expand)

Looking at this Weekly chart, we touched the 0.50% fib today which is amazing for those trying to get short and those holding longs. Nothing interesting on RSI as he broke a minor trend line, but if he breaks that upward trend line, that will be very interesting.

Let's go straight to the $EURUSD 4hr now:

(click on image to expand)

As we can see, we are in a channel on $EURUSD since March and is working AMAZING! Today we touched that channel resistance line (around 1.1700) and reversed very hard on London close. That candle is not bearish and is shows how many traders closed their longs there and how many went short. RSI is not showing anything eyet, but this pair is very very overbought (does not mean for you to sell now). 


Conclusion on both analysis:
Looking at the $USD long term we can see that he is maybe in a flag and very 'rangy' indeed. Short term we touched a very very important level today (2005 high and 0.382% fib) which worked as a very strong support and for that reason, a ugly candle is showing but we need to see the close first (bullish, 4hr)
Now, $EURUSD is the same thing too, looking the long picture, we are consolidating after a big fall and also touched big resistance levels (0.50% fib and 1.1700 channel resistance). Short term, we are in a very strong channel and today we just touched the top of that channel and reversed hard. 4hr candle is very bearish but we need to watch the close first.

In my opinion (trading): I bought $USD across the board today: 
short: $EURUSD, 
long: $USDCHF, $USDCAD
I think we are in a great place on the $USD to own again.
Note: this trades are my long term trades.

I hope this post makes you know better where we are and what can happen.

By Thiago Duarte
Chief Strategist at Duarte Investment Group 
thiago@duarteinvestmentgroup.com 
@thiagotrader 

RE: When I use Formation with RSI confirmation to trade

Hi Traders,

Replying regarding the last post I wrote regarding waiting for RSI confirmation to get short $USD. After we got that confirmation, I decided to get long $EURUSD and I just closed that trade with +95 pips. Amazing trade guys!

Here is the $USDOLLAR 4 hour chart before the confirmation:

(click on image to expand)

Here is the $USDOLLAR 4 hour chart after we got the confirmation and I got long $EURUSD:

(click on image to expand)

And here is the affect of the negative $USD into the $EURUSD 4 hour chart which I got long:

(click on image to expand)

I hope you guys watched that RSI on $USDOLLAR as I did and got some pips somewhere. I also hope you guys understood better how to use RSI to help us by giving more conviction in our trading plan.

By Thiago Duarte
Chief Strategist at Duarte Investment Group 
thiago@duarteinvestmentgroup.com 
@thiagotrader 

When I use Formation with RSI confirmation to trade

Hi traders,

Today I will show your guy a great example of when I find a formation on my graphs and I use RSI trend lines (TL) to give me more support and open a trade.

Bellow you can see my $USDOLLAR 4hr chart which is showing my a bearish flag. 

(click on image to expand large)

Keep in mind that flag needs to hold bellow the 0.50% fib of the last move. Which in this case is from 12058 (0% fib) to 11947 (100% fib). At the moment we are just touching that fib which is a great thing because my stop loss will be very close to my entry if I do trade.

So after I find a formation, I will look into my RSI to add trend lines so I can use them as an alert when they do break TL.

(click on image to expand large)

So above you can see my work on RSI. I added those small circles for you to know what points I looked when I saw the RSI, so by looking those points I added 2 TL and worked amazing! Very clear indeed!

Now what is my trading plan?
As I can see a bearish flag on my chart, I will wait for him to slide and break my RSI's trend line which will give the market even more pressure to short this market. 
If he does not break down and start going higher (above 12010), I will delete everything about this flag and be away as the flag got cancelled. This especially happens when some data is out.

Take profit level?
My take profit level will be the measurement of the flag which is the size of the last move of the flag which is the same levels of the fib which I mentioned above. I normally add that arrow and then cloned and put on my graph to not make me forget. So my take profit here will be 11900.

Stop loss?
Very close, 12010. Which is the last high and also above the flag/channel line.

Now, all I need is to be patient and wait for this market to come down and break my RSI trend line for me to jump in.

I hope it plays out!

By Thiago Duarte
Chief Strategist at Duarte Investment Group 
thiago@duarteinvestmentgroup.com 
@thiagotrader 

Archived webinar - My trading strategy (2015)

Hi traders,

Here is my archived webinar from last week which I showed my short and long term trading strategy. Please watch, share and comment.

Thank you!

By Thiago Duarte
Chief Strategist at Duarte Investment Group 
thiago@duarteinvestmentgroup.com 
@thiagotrader 

RSI breaking trend lines everywhere on the $DAX

Hi traders,

I hope everyone had a great week. As normal, I like to do my homework/analysis on Saturday or Sunday night as the market is closed and I am relaxed.

Here is my RSI trend line analysis:

In this list, you can see my analysis on Monthly and Weekly time frame only. I am not showing the Daily and 4 hour because is very short term and probably most of you will see this post just tomorrow.

However, as you can see the $DAX broke its RSI's trend line on the Monthly and Weekly graphs. This is a very powerful alert that a bearish move is to come.

Is it time to sell $DAX? I think so but keep in mind, this is a powerful market and you should know your stop loss before entering a trade. I will look for pullbacks to sell when it comes.

Here are the graphs:

Monthly:

Weekly:

*Click on the image to expand

By Thiago Duarte
Chief Strategist at Duarte Investment Group 
thiago@duarteinvestmentgroup.com 
@thiagotrader 

Free webinar about my strategies and the tools that I use

Hello everyone,

For the past few days I have received many emails and tweets from other traders asking me many questions about my strategies and what I use to open trades and close, so I decided to make a free live webinar to explain to everyone everything I look for when I am trading.

The webinar will be this Thursday (13/08/15) at 8pm UK time and will be around 1 to 1:30 long. Here are some of the topics that I will discuss in the webinar:

• RSI
• Fibs
• Candlestick Patterns and Formations
• Time Frames
• Elliott Waves
• Organisation
• Trendlines
• and others

Here is the link to join me at 8pm UK time on Thursday: 

https://www.youtube.com/watch?v=TzsXxcIM2hk

By Thiago Duarte
Chief Strategist at Duarte Investment Group 
thiago@duarteinvestmentgroup.com 
@thiagotrader