The Dollar Index made an interim high when the market appreciated Janet Yellen’s dovish statement following the March FOMC meeting. The market has consolidated over the last couple of months between the recent highs and the support that has built up around 93 in the Index. The Dollar’s decline over the last couple of weeks has been bought by commercial traders. We sent a COT buy signal last night. It was based on these factors and triggered by an upturn in our proprietary short-term market momentum indicator.
The brief guidelines for this methodology are based on siding with the commercial traders’ momentum and using short-term, speculatively driven counter moves as entry points. Fine tuning the entries allows us to trade comfortably using the weekly commitment of traders data. Last night’s Dollar Index COT buy signal met all of these criteria.
I believe that a good portion of this morning’s rally is based on speculative short covering along with commercial traders buying to goose the market above its recent downward channel. Clearly, the move is being spurred by the potential for higher domestic interest rates as Jerome Powell, Governor of the Federal Reserve suggests there could be two rate hikes this year rather one. The potential of some yield to be earned on cash along with the deteriorating Euro currency has also helped pull global traders into the Dollar.
Based on the market’s recent actions and per our email to subscribers last night, we’ve bought the Dollar Index and placed a protective sell stop at the recent low of 93.30. This morning’s move is testing the downward resistance. A close above the downward trend line confirms the change in direction.
This material has been prepared by a sales or trading employee or agent of Commodity & Derivative Advisors and is, or is in the nature of, a solicitation. This material is not a research report prepared by Commodity & Derivative Advisors’ Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.
The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Commodity & Derivative Advisors believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.