In today’s live session, we discussed the ‘3 strike rule’, and then we discussed our outlook for the US Dollar Index (DXY).
The 3 strike rule does not only apply to baseball, but it applies to trading as well. We believe that once three trades are lost in succession, it is best for the trader to take a step back. This a necessary step in ensuring that trades are not forced and that the losing streak is not extended. Some weeks and market conditions aren’t favorable for you or your strategy and that’s okay. Regroup, gather yourself and live to trade another week.
In yesterday’s session, we discussed 93.89 as being our upside target for the DXY. This morning’s GDP data pushed the Index way past this level and we now have a dominant Dollar on our hands. The next target for the DXY is 94.75 and with the election being just five days out, this level can certainly be reached by then. This scenario opens up possible swing shorts for EURUSD and Gold.
With the election quickly approaching, we feel it’s best for traders to reduce their risk as the reaction to the results will be unpredictable. In addition, both Trump and Biden will be sure to make remarks about the results which can also affect the markets. We are in for a fun ride, it’s best we sit on our hands and watch the show. As always, be safe and trade responsibly!