Retrospectively and actively understanding the DXY Pre Fed

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Lots of Traders reflect on the DXY to give a gauge of where the USD is at.

Understanding the DXY requires both a Fundamental and Technical approach, much like trading in general.

FED News due out later concerning interest rates looks like it has a consensus of raising to 5.5%, largely priced in already.

Why use Fundamentals AND Technicals? That's because the fundamental (sentiment/mood) part determines overall direction for the market to trend in. This was up for the DXY when people started rushing to the dollar and down for the DXY as people pulled their money away on reduced economic fears. Within this, we had periods where there was uncertainty and you get pullbacks (pops) in the market that are followed with continued falls on the renewed sentiment.

You can now see that the DXY is raising in value after bouncing from Key PA levels where people liquidated and flipped their trading bias (technical long term zones). If sentiment for the DXY is not strong enough, as is the case PRE Fed, you see rejection at your earliest resistance zones. When this occurs, you often need a larger sentiment case for the asset in question to immediately break early resistance zones and continue the process of reaching older ones, much like described earlier.

So where are we now?

Well the DXY is rebounding to early resistance zones. This is likely to be a LIGHT size trade because we are so early on the retracement. There is no point deciding you want the market heavily short after its already tanked for a significant amount of time, because inherently you are receiving poor value on your trade. You can already see that there is price rejection in the market and it looks weak to the upside.

Its far better to continue to scale into the market inline with the overall underlying sentiment much like you have seen happen already. Following this trajectory delivers natural market movement as a flow for your trading entries.

Exits will come gradually at Price Action levels on lower timeframes.

Do not overleverage and only short a larger Vol higher, its far to late to do so now. Light re longs may come on dips and further entries below the previous low will become appropriate if we reach there (nearish future).

Using both Tech and Fundamental analysis is a NECESSITY.

RZ = Resistance Zone.

Eyes on FED.

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Very light minor shorts, further above at RZ2 planned.

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Muted reaction, hold for comments and follow initial plans.

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Light longs come lower on impulse drop (post fed news)

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Looks likely we will get higher due to local PA, eyes on news reaction again.

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Exit all longs and flip very lightly short.

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VERY light shorts into monday. Look how far you have already fallen and how far you have rebounded. Early PA on lower TF's giving indication. Always make size according directly to inferred / likely risk at current price point.

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Price looks weak into early PA zones. Do not use this to slam in short, scale in very light (It's very early)

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Hold off further entries until key higher TF PA zones.