The US dollar has moved higher against all the major currencies this week. Today, however, the greenback is lower against most of them as some traders take profits and oil prices ease. That pullback has given the other currencies some breathing room, but it has not, by itself, changed the technical bias. For most of the pairs I follow, the charts still favor the dollar.
So what should traders watch as this week ends and a new one begins?
In the video above, I look at five currency pairs:
- EURUSD
- USDJPY
- GBPUSD
- USDCHF
- USDCAD
For each pair, I identify the current bias, the levels that would begin to turn that bias the other way, and the next targets if the prevailing move continues. Those levels give traders a way to judge whether today’s dollar weakness is a temporary correction or the start of something more meaningful.
There is an important lesson in that preparation. Trading does not begin when the price reaches a level. The work starts beforehand, when you decide what you will look for if it gets there.
The best traders are able to anticipate because they have prepared for more than one outcome. They know where buyers or sellers have previously stepped in. They know which levels need to hold for the current bias to remain intact. And they know what would make them change their view. When price reaches one of those levels, they can assess the reaction instead of making a rushed decision in the moment.
That does not mean predicting where each pair will trade next week. It means having a plan: If this level holds, what is the next target? If it breaks, where does the bias shift? The market will make the decision. Our job is to be ready to respond when it does.
In the video, I lay out those levels across all five pairs so traders can finish this week with a clearer picture of the risks and prepare for the opportunities ahead.
This article was written by Greg Michalowski at investinglive.com.