Start of spring or the end of winter. Seasonal uncertainties USD. Trade recommendations on the USD index futures.

Good day to you dear fans of high income on financial market!
A professional in this field – Andrew Green with you.

The new’s flagman of the last week was, of course, a monthly report on the social sector. To say that it was filled with surprises is, unequivocally, exaggerated. To say that it was bad is simply not objective. There are no such indicators of employment and the dynamics of the level of average income, practically, anywhere in the world. And even a slight deviation for the worse compared to the previous period, does not at all cancel the fact of record-breaking and historically low unemployment rates and high rates of employment. And if we take into account the high PMI (purchasing managers’ index) from the ISM (Institute Supply Management) in the manufacturing and non-manufacturing sectors of the US, which in February 2018 reached 60.8 and 59.5, respectively, the overall picture in the the economy of the United States looks very good. And despite not high CPI (consumer price index) indicators, which caused a short-term weakening of USD, I leave in force positive perspectives for the US dollar for this year.

For a more objective analysis, let’s study the accompanying indicators of conjugate US markets that are familiar to us. And let’s start with the Dow Jones in Figure 1.

As we see, starting from February this year, a narrowing is formed on the graph of the US stock market index, which is called consolidation among specialists, this is a very strong signal for the prospect of further shooting in the market. Taking into account a number of negative factors for the international economy, in the form of tariffs for the supply of aluminum and steel in the US, as well as further development of the “gendarmerie” ambitions of the United States on the international economic and political arena – a breakdown of consolidation is possible with a further reduction of the stock index to levels of 20000.00 – 22000 , 00.

Next, look at the VIX fear index from the Chicago Board Options Exchange (CBOE), figure 2.

If further decline enters the yellow channel, then the investor’s mood for peace and quiet is able to give an inverse correlation between the US stock and currency markets. If to say it is easier, then with the fall of the Dow Jones index, the US dollar will be strengthened relative to other currencies.

No less interesting is the situation on the futures on the USD index.

Here we see a fairly wide flat (lateral movement) in the range 89.20-40 (support) and 90.40-60 (resistance). As for me, a very convenient situation for trading in both directions on the reversals, but it is preferable and safer, in my opinion, to consider the purchase option, namely, from the support line at 89.20-40. Medium-term outlook is given to the “bullish” version of developments in the US dollar.

Examples of transactions:

• BUY limit 89.20, SL 88.80, TP 89.90
• SELL limit 90.40, SL 90.80, TP 89.60

Fear shackles and stops, and caution helps to choose direction and pace. 
Do not be afraid of the market, but be careful and reasonable.

Andrew Green