U.S dollar index technical outlook for medium-long-term

It has been a very long time since I wrote on my blog. The latest article is dated to 2017. This happens mostly because I was focused on the writing and analysis for clients and managing my personal affairs.

Coronavirus changed the world radically which caused grief for some, but not much change for others who already work remotely. Under the current situation, I can safely say the world shifting from offline to more online and it means more and more innovation or competition in the future.

Nevertheless, the trading business might continue the same as always until we have different humans who think differently on how to trade.

I am planning to continue using the blog to experiment on the post and write my thought on trading. This article is about the U.S dollar index. If you want to contact me, you can click here for my Upwork profile

U.S dollar index fundamental view

Fundamentally, nobodies like the U.S dollar after the Fed announced full back-up on the economy. Stimulus deals also weigh on the currency.

In the previous month, the Fed Jerome Powell assured that the Fed will maintain the same stance and urged lawmakers to approve another stimulus bill to battle coronavirus impact. It could mean further weakness for the U.S dollar.

However, the U.S election loom. The election result could create a major change in the policies. Recently, U.S President Donald Trump diagnosed positive for coronavirus which triggers volatility in the market.

Traders and investors will expect more volatility depend on the news development while nearing the U.S election. The long-term direction of the U.S dollar index might be decided several months after the election.

U.S dollar index on the verge of bounce

Monthly Chart

On the monthly chart of the U.S dollar index. we could find the index tumbled from 100 handles and reach an orange box area between 92.00 – 93.00. The index stage a bounce from the box area and closed the month bullishly near 94.00.

The bullish reaction is normal after a nearly 10% drop from the 100 handles. In the previous week, U.S President Donald Trump and diagnosed positive for coronavirus which triggers uncertainties in the market.

I think the U.S dollar index might stage a bullish correction with 95.00 or the March low as a resistance level to watch. On the upside, June’s also will become the level to watch for a possible bullish extension.

Weekly Chart

The situation on the weekly chart interestingly confirmed that 96.10 might become the final resistance to watch. There is a weekly SMA 200 present which will become major resistance to watch. At the current time, the index will attempt to climb above 94.00 and target 95.00

Daily Chart

U.S dollar index printed higher high and higher low on the daily chart which means the short-term trend is bullish. If the index starts moving higher above 94.00 – 94.30 then we will have higher low confirmation.

Trading Plan

Traders who have long positions in U.S dollar pairs could continue to hold long positions until the index reverses its direction. We think 95.00 and 96.10 will become the major levels to watch.

However, if the index could print lower close below 92.60 then it is the time to turn bearish entirely.

Long-term map on forex major pairs EUR/USD & GBP/USD

Fundamental Outlook

First of all, there are major shift which happen in the world as of now, Here is the major outlook on several countries:

  1. USA – the trend is bullish for the currency as The Fed ready to increase the interest rate three fold. But, outlook on political ground is uncertain as President Trump might rock the financial market with his policies
  2. Europe – There is slow switch from bearish to bullish trend as the countries inside Eurozone recovered. Brexit might cause heavy casualties, and Eurozone waiting for other possible referendum. Though bearish, expect shift of Euro from bearish to bullish this year or the year after.
  3. Japan – No change to policies, they love the Yen weakness and will continue to do it.  But if most central bank start increase their interest-rate. Japan might end its negative rate policy.
  4. China – Being attacked by President Trump is not a happy thing. The country stay strong but growth slowly decline.
  5. Australia – May enjoy upward momentum in the currecy as gold and other precious metal recovered in inflation laden economy.

Out of all positive news, Euro will become weakest currency followed by UK Pound sterling. And there is possibility the world tension increase under protectionism policy implemented by advanced economy.

Technical Outlook

EUR/USD

EUR/USD bull might not love this situation where the pair is near the top of consolidation range. In March, the pair might be limited below 1.0800 and start moving down after the top tested. But, it is possible for the bull to reverse the major trend too. For now, let’s just look at price reaction near the top 1.0800.

GBP/USD

I am waiting for short opportunity in GBP/USD also. Similar to EUR/USD the pair might experience sharp turn at the end of March as UK trigger Brexit. Watch for short chance in the pair.

Trading Plan

Short position  at 1.0800 for EUR/USD with stop above 1.0850++, possible to add position at 1.0825.

Short position when GBP/USD hit 1.2480 – 1.2500, stop placed 100 pips above the area.

Note: Will switch to long position depend on fundamental development.

22 April 2016 Possible trade review

Spike! yes big spike, really scary… nope I don’t think so. My hand was empty and my attention was not in trading when this happen. Then you’ll be surprised when this happened… again, nope.

As someone who already tasted nastiness of margin call, it will be foolish to repeat same mistake. Einstein said:

Insanity: doing the same thing over and over again and expecting different results.

If you ever got margin call and experience it second time, that’s fine because you’re still alive and nobody become expert in several margin calls. But hey, if you maintain margin call rate continuously, I’d join Einstein and say you’re insane, get a life!

There’s only 1 way to avoid margin call, remember only 1 way and such a boring way but proven (I’m not saying profitable, but at least its certain way to avoid margin call). Read until end of this article to see the way.

EUR/USD & GBP/USD Review

EURUSDM15 possible tradeEUR/USD moving up sharply but later moving down sharply too, if we see from start of day – end of day. Nothing really changed. Something big could have happened, but I don’t know the result. (I’ll know later after browsing around and read news).

We are here not to satisfy  our needs to know more, but we are here to take out of market what little we can live with. Reviewing chance to trade, I already marked 4 points where trade possibly taken.

A – Short trade, yes if I’m there I would’ve already taken the trade and result in losing trade (Stop loss blue channel).

B – Long trade, Highly possible another losing trade, but I’ll never take it as price move really fast.

C – Short trade – After B, trade at C surely have higher chance to be successful and it move at least to blue and red channel where we can take profit.

D – Short trade – similar to C

GBPUSDM15 spike newsGBP/USD same trait as EUR/USD yesterday, here are the review:

A – Short trade, almost reach blue channel target line. End up with loss if not present.

B – Short trade, less likely taken because of 1 fast candle moving to balance line. But if taken it’ll be another loss

C – Long trade, this one also less likely taken with same reason as B.

I’m not discussing after C because I forgot to market D point Lol, but if you take any trade it should be short.

Now as I promised in the middle of this article, what is the only way to avoid margin call? the answer is sound trading plan with stop loss mentioned before any trade taken. All of the risk already calculated and we already know if it failed we’ll loss $x.

Sounds lame, but remember 1 think, we are here not for flashy things, we are here to make profit, as long as we remember that, we’ll move to right direction. Happy green pips.

IHSG 21 April 2016 Review

Current Portfolio

Up until now, its been 9 years since I got into this business, its been that long and looking back behind make me want to give up entirely. Unfortunately I still stick on trading and slowly my account tell me to stay.

21 April 2016 Portfolio
21 April 2016 Portfolio

My account show growth of 8.02%, but that’s not all, actually the growth around 20% since October last year. Many might say its easy to get this kind of growth and that number is insignificant. I agree its not significant, but I’ll stick with my plan to hold great companies and sell bad companies.

IHSG 26 April 2016 Analysis

21 April 2016 IHSG
21 April 2016 IHSG

Enough with portfolio, today I present you with IHSG chart, as you can see currently we have bull leg challenging 4,900 and perhaps 5,000 later. I’m sure that level is strong medium term level, but if you ask me where to watch, I’ll suggest to look at 5,200. Why? its all about demand and supply shown in the chart.

Let’s talk about September – October last year, both months was one of the best time to bought positions in IHSG. Why you ask?

  1. 5,500 to 4,000 was nearly 30% decline in other word 30% discount.
  2. Market rarely break thousands level consecutively
  3. Chart show there is support from AUG 2013 rally
  4. Strong country fundamental

I’ve been waiting for it to happen while enjoying my parents nagged me to quickly buy a position before that time Lol. (Now I’m advised to sell my positions, I said okay I’ll think about it).

Position Review

While its important to look at IHSG, its also important to review each companies one by one. Here is my quick review:

  • TINS – still good to hold, TIN price moving up since last month. If price keep moving higher, we can see TINS near 1,000
  • GIAA – we are near holiday session, I don’t think garuda will be left out alone, and oil price still low.
  • KLBF – 3 weeks ago buyer came into market, if they give up price should already come back to burst level.
  • CTRA – this one only bonus deviden stock, plan to hold forever
  • PGAS – very long term trade, bought level already good, if go lower will buy more. Government owned, we are slowly change oil usage into gas.
  • SRIL – Heavy labour company, I need to make new analysis again, neutral.
  • LPLI – Not really sure with this one as this is minor part of portfolio where I need to reconsider selling at BEP
  • SMCB – Last week spike show someone want to bring this up, cement industries affected by oil price, oil still low and this is good for companies. I heard many foreign companies want to build factories in Indonesia. This is good too.

ECB will have meeting today, my advice just wait for news and see long term price movement instead of short term impulse.

That’s all for today, let’s back to trading.

Life – past stories, good experience

Life must goes on, people always talking about that. Yes this year I got out of one community and I think everything gonna work fine. But I realize I’m too naive thinking like that, people can say I’m too easy to trust people. Each time people said careful with your judgement, I just said that person can be trusted…. and here I am facing consequences of my decision.

I partnered as investor with my fellow guy in the community, I respected this person as leader and my discipler, the stories started when he was in financial trouble, I lent him and said its okay you can return it to me later slowly. After that event, he resigned from his work, all I know he got resignation benefit from Jamsostek and paid all he owed (I’m not included). Not long from that time, he partnered with other guy but with bad percentage of profit sharing of 50:50. He came to me and offered 30:70 while showing me report of income, I simply trusted and think okay I can make the deal better.

You take 70% and also calculate your transportation cost, all the cost needed to do this business.

The deal soon started out of trust, I can withdraw profit after reach Rp. 10,000,000 (I started with Rp. 6.000.000), near end of last year I added Rp. 3.000.000 also with phone and tab to sell valued around Rp. 1.000.000. November is the first profit withdrawal Rp. 590.000 and December is the second Rp. 1.280.000. After that he ask me to wait he’ll transfer next month with all of the last month profit.

I waited, waited, waited until start of March I ask when will he transfer, he only ask for my bank account number and ask me when he can meet me, I said I’m available at Cikarang, when I return to Jakarta it’ll be tentative because currently its been busy time. We hadn’t met, last reply from him was 18 March. No reply, only avoidance, I shot msg at his Facebook, but no reply.

What I feel only disappointment, No perfect friend, no perfect communities, especially when I heard rumor around that I break the contract and not in partnership again. I can only said, “Never sacrifice friendship because of money, money can be found, but true friend hard to find”.

I can only said, thank you, you can take everything but remember to repent when there is time, thank you for teaching me so I can be careful around whoever I called friend.

Let’s back to trading.

All About Trading and Life