The US Dollar Index rose during the session on Tuesday, using the 81 handle as a bit of a springboard to go higher. As you can see on the chart, I have drawn a “neckline” in this potential inverted head and shoulders pattern. It is because of this that I believe if we break above the highs back in January, this market is going to go much, much higher. It might be difficult for this market to do that between now and the nonfarm payroll numbers, but I am definitely paying attention to this.
With that being the case, I think that buying contracts in the US Dollar Index futures market might be the way to go. This is a type of market that can make a lot of money for the trader if you’re able to take advantage of it.
There are other avenues to pursue.
There are other avenues out there that you can pursue in order to play the US Dollar Index. After all, 40% of the value is attributed to the EUR/USD pair, so in a way can use that. If this contract goes higher, it’s very likely that the EUR/USD pair will go lower. However, there are also binary options that you can get involved in, as well as normal options. Let us not forget the CFD markets as well, as the line of Forex brokers now offer the US Dollar Index on the Metatrader platform. With that, there are plenty of ways to play this particular setup, and because of this I will certainly be paying attention or the next week or so.
I’m the first to admit that the latest move has been fairly parabolic though, and as a result a pullback is almost necessary at this point in time. That being the case though, I am not willing to sell that pullback, rather I look at it as a potential buying opportunity on the pickup of momentum to break out to the upside and above the 81.40 level. Selling at this point time is something I simply have no interest in doing.