About Chartology

With "Chartology", you'll be sitting in the front row as I discuss price action analysis, market cycles, chart pattern setups, optimal trading time and volatility analysis, as well as the psychology behind price action. Put these tools together and you're looking at how to begin mastering the charts. In fact, be sure to watch the "Your Forex Questions Answered" video here.

Every day, occasionally more often, I'll additionally discuss order entry, U.S. Dollar Index, crude oil, gold, and the Dow. Forex trading allows and requires a viewpoint that goes beyond simply analyzing the pairs. I'll explain in detail how I scan for trades — I call it "triage" — how I set up trades proactively, and how I manage entries and risk. Trading isn't all that diffcult but the process of finding your tools and approach and trusting them is. So here's your front row in my trading office, thanks for reading, let's get going!

Who is Queen Cleopiptra?

Raghee Horner is a private trader, founder of EZ2Trade Software, entrepreneur, and author. She has been trading forex, as well as futures and stocks for almost twenty years. She is a regular contributor at a number of sites including FXStreet, Trading Markets, Autochartist, eSignal and a featured speaker at the Forex and Traders Expos. Her commentary and analysis is seen daily by thousands of traders at her personal blog ragheehorner.com. She has written articles for Technical Analysis of Stocks and Commodities, Currency Trader, Your Trading Edge, and Traders Journal magazine.

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Where's the U.S. Dollar heading next? Ask the Dow.

Posted 07:52 03 November 2009 | Comments

Where's the U.S. Dollar heading next? It depends on your time frame ofcourse. I break my trading charts into 15, 30, 60, 240 minute and daily charts. This means I could be looking at up to five different market cycles across the U.S. Dollar Index at any one time.

The current mood of the U.S. Dollar Index is being driven by the risk appetite and risk aversion swings in the equities market. I use the USD/JPY pair to determine whether the Dow or the Dollar is driving the dominant psychology.

Consider that these two markets - the Dow and the Dollar - push and pull one another. They have an inverse correlation which means when the Dow rallies, the Dollar gets pushed lower. This has to do with the risk appetite (buying "risker" equities) unwinding Dollar long positions ("flight to quality or safety").

So knowing this, I know that each day before I trigger any entry on my dollar-correlated forex pair (EUR/USD, USD/JPY, GBP/USD, USD/CHF) and even my Comm Dolls (USD/CAD, AUD/USD, NZD/USD) that I must know what the Dow may do to the Dollar.

This also means that for those of you who watch or trade fundamentals, that as as long as the Dow is the driver, good news will rally stock and push the greenback lower.

For a look at the morning's near term psychology, let's look at the 15 minute time frame. Here's a look at the U.S. Dollar Index and the Dow Jones as it looks pre-market:

And here's how I determine which market (the Dollar or the Dow) is driving the current psychology:

Here's the USD/JPY -- which is the pair that many trader use as the "risk appetite/risk aversion" barometer for the market -- with the Dow (YM continuous contract). The USD/JPY is in green/red and the Dow Jones is in black/white:

And here's the USD/JPY and the U.S. Dollar Index:

Notice which it is moving with? That's the driver for the psychology!

I will discuss more of this futures-forex connection in the near futures and if you have specific questions, please go ahead and leave me a comment.

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