The other day a guy tweeted to me that I couldn’t have been more wrong about one call. Yes, I do get them wrong, as much as 50% of them. If not more.
I often write about that, as I also say that for your (financial) well being is probably much more important to be able to manage risk effectively than to be able to make a higher number of calls right. But I get where the guy was coming from. In the world of instant gratification people feel the need to be right all the time and demand instant results. Go figure, ha? Is this also be a reason why so many traders converge to short term trading? I guess.
Anyways, let’s get to today’s topic. I was a dollar bear not so long ago, but the recent developments were making me change my stance to more and more neutral lately when I was becoming also more open to bullish scenarios. It’s ok if traders live in their idealistic world where they constantly feed their own biases, but this might not so profitable. To me it’s not hard to change my mind and admit my initial analysis was negated.
We saw a breakout attempt in the dollar a few weeks ago and it initially seemed it will be rejected. We can see this from the $DXY dollar index chart below, see circled candles.
It’s very constructive to see that the dollar was able to reclaim the breakout point again. If it could stay here or get even higher in the next couple of sessions, then the bears will have to call it a day.
While the DXY is interesting, it’s usually much better to look under the surface. And one of the more attractive pairs in my view is USDNOK.
We’re not very much far off of new, initially, 3 year highs, and later almost 20 year highs. I don’t know about you, but that’s bullish in my book.
Another one I’d like to point out is USDCAD.
Volatility is very compressed and I learned that what follows a time of compressed volatility is a time with expanded volatility. It seems this one, too, could break out higher.
This Summer could be very interesting in the currency markets. Whichever direction the dollar breaks, it could get fun and much more volatile than FX traders were used to lately.