By: DailyForex.com

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.

Dollar Index 73014

Related Articles
  1. Fundamental Analysis

    The Evolution of Obamacare Since Its Inception

    Find out whether the Patient Protection and Affordable Care Act, also known as Obamacare, has lived up to its lofty projections from 2010.
  2. Charts & Patterns

    How To Use Volume To Improve Your Trading

    The basic guidelines to analyzing volume may not apply in all situations, but overall, they can help direct entry and exit decisions.
  3. Investing Basics

    How To Invest In Penny Stocks

    Penny stocks are highly speculative and very risky for many reasons, including their lack of liquidity and small market capitalization.
  4. Executive Compensation

    How Restricted Stocks and RSUs Are Taxed

    Many firms pay a portion of their employees’ compensation in the form of restricted stock or restricted stock units.
  5. Mutual Funds & ETFs

    The 4 Best Lord Abbett Mutual Funds

    Discover the four best mutual funds administered and managed by Lord, Abbett & Co., LLC that offer investors a wide variety of investment strategies.
  6. Retirement

    How Much Should You Have In Your 401(k) To Retire?

    Determining how much money should be in your 401(k) when you retire depends on several variables, many of which are uncertain.
  7. Investing Basics

    How And Why Do Companies Pay Dividends?

    The arguments for dividends include the idea that a dividend provides certainty about a company’s well being.
  8. Investing Basics

    Economist Guide: 3 Lessons Adam Smith Teaches Us

    Learn three critical lessons about economics from 18th century philosopher Adam Smith, considered by many to be the father of economics.
  9. Estate Planning

    Estate Planning: 16 Things To Do Before You Die

    If you don’t plan your estate, your surviving family may have to deal with disputes and probate that were avoidable.
  10. Economics

    Understanding Cost-Volume Profit Analysis

    Business managers use cost-volume profit analysis to gauge the profitability of their company’s products or services.
RELATED FAQS
  1. What is arbitrage?

    Arbitrage is basically buying in one market and simultaneously selling in another, profiting from a temporary difference. ... Read Full Answer >>
  2. What is Fibonacci retracement, and where do the ratios that are used come from?

    Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Full Answer >>
  3. What is a derivative?

    A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset, ... Read Full Answer >>
  4. What is finance?

    "Finance" is a broad term that describes two related activities: the study of how money is managed and the actual process ... Read Full Answer >>
  5. What items are considered liquid assets?

    A liquid asset is cash on hand or an asset that can be readily converted to cash. An asset that can readily be converted ... Read Full Answer >>
  6. What is comparative advantage?

    Comparative advantage is an economic law that demonstrates the ways in which protectionism (mercantilism, at the time it ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center