Dollar Reverses Fakeout Breakdown: Sell the Euro

The US dollar index just reversed the prior breakdown this morning and we’ve got a market timing signal. It does that once in a while and when it does, it can work out as a good reversal trade. The market was planning to go down to yet another lower level and then reversed.

Set some tight stops and you’ll be fine. You can go long the dollar using UUP or short the Euro and there are several ETFs you can use to do this.

As long as the FXE remains below 133.90, the trade is still OK. Above there it comes into doubt. The move below that 133.90 is the trigger point for this trade.

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Standard Disclaimer: Remember, it’s your money and your decision as to how to invest it.

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One Response to Dollar Reverses Fakeout Breakdown: Sell the Euro

  1. SunAndStorm says:

    Please note that the Euro could retest the breakdown/signal point and then move down again. On a retest a market can move slightly ABOVE the breakdown point to remove the weak “shorts” in the market and then move straight back down, so be careful about using an extremely tight stop at FXE of 133.90.

    EDIT @ 12:12 pm ET: Using a stop of 1.3497 on the Euro would be reasonable stop in my opinion.

    Standard Disclaimer: Remember, it’s your money and your decision as to how to invest it.

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