Post election volatility and upcoming low liquidity – a deadly combination…

It has been a while since my last update on this blog. Due to obvious reasons, I have been quietly watching the markets from the sidelines. A month after trump trumped the whole world with a surprise, forex markets have not yet fully absorbed or adopted to new conditions of the global currency.

Post election volatility

This chart is pretty much self-explanatory. When low liquidity creeps into such volatile conditions, sudden spikes to either side becomes commonplace. Most technical strategies will fail in such conditions because there is neither direction nor a clear-range in the market.

This is the ideal time to observe the markets with a distance and just sit on your hands. But for long term swing/position traders, my previous forecast couldn’t have been any better – US Dollar crash? Not so fast, perhaps the exact opposite…
(this forecast was posted before the US presidential election.)

There are few attractive trade setups forming for 2017, as the US dollar is likely to reverse its course after the 5th wave completion.

DXY projection before a sharp decline

Since this is a weekly chart, the bullish wave is expected to run for another couple of months. However, the price now is above the upper boundary of the 4th wave (blue) correction. Technically (excluding wave count of lower degrees) the 5th wave may conclude anytime.

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