A Spread & Straddle Strategy Applied
The USD Price Action has been limited to a certain range level at the lower band of the trend in search of a base to solidify its next move. Surrounding fundamentals still remain with inflation, interest rates and equites volatility as key factors investors and traders are focused on.
Four weeks of price range and consolidation which the USD DXY have retested 88.38/43 low have now retraced and nearing its recovery back towards the 90.05/10 levels. The market is awaiting for fresh incentives to justify a continuing price move above this level. MegaTrade101 initial USDX Futures price level above 88.43 with a 'Spread & Straddle' strategy in case the market does otherwise. A test for neutrality with a net position in place whenever a break occurs is a smart way of testing the waters while it is calm. The advantage of having access to and maximize available strategies both with Futures and Options markets for the USD, Foreign currency and Equities.
As a background analysis, there are certain price action that formed a 'Cyclical Price Pattern' which were identified across major currency and a cross sectional difference between equities that share similar yet diverse signals. Thus making a summary report may only prove to be speculative rather than an absolute definition for stock picks to be able to pinpoint one from the other. Although, the financial sector has been identified to carry a direct correlation with certain stocks.
This would only mean that the prevailing market trend would still overcome the negative effects of the recent market sell off and current market volatility. In this case the USD current four weeks base pattern can serve as a valid support for now as shown above chart. On its simplest form from a chartist perspective they would call this pattern simply a 'Double Bottom' but that is after the fact. As a caution, we would not discount also the probability of a let down in the event unexpected overseas events and or comments from the UK comes through on interest rates as an example
And the next turn of events upwards would likely occur against all odds. This is where we have applied the basic principles on the 'Law of Total Probability' in current market conditions. Which still proves that the over all positive tone surrounding the financial market contrary to the recent market sell off would eventually continue. And it can only be proven 'After the Fact' when price action will justify this market call, as we are left with slightly over a month nearing the end of the 1st quarter trading. In the event that prices do move otherwise, subsequent trade adjustments on the positions can easily be rectified.
