Risk Aversion Is Over For The Dollar

Today, when the US Unemployment data came out and the number was way better than any one expected, the Dollar gained verses the Euro. The Dollar was up verses every currency today because of the positive report. The numbers of only – 345k non farm unemployment claims signals that the U.S. economy is doing much recovering and at a rate no one expected.

But wait! That is good news but what the report does not tell you about is the number of people that have been trying to find work and cannot. After six months their unemployment runs out and they are off of the unemployment numbers claims report. So what seem like good news for the economy might be a bit misleading.

Up until today positive economic news has brought the Dollar down because of risk aversion, and there has been little of that up until the last couple of months. The Dollar has been losing ground steadily for two months but when the positive UC report came out the dollar took off verses the Euro. Today the pattern has changed so you as a trader must be ready to change the way you trade the news.

Trade Plan For Eur/Usd

The Dollar made large gains today but the upward trend of the Euro is still intact. The major support level of 1.4048 has been taken out but the downward trend support line is still intact. Watch that line to see if the upward trend is changing. I suspect that we will see a bounce off of that line and the Euro will continue it’s climb verses the Dollar.  The reason for my theory is that I do not think that the U.S. Economy is going to turn around that quickly.

I could be wrong I have been wrong many times in the past and will continue to be wrong in the future but it does not matter.  The reason is because I trade on what the price actually does and not what I think it will do. I just write what I think because it helps me to prepare and keeps me looking at the right levels.

So I am waiting for a bounce off of the downward trend line, when that happens I am going to buy. If the pair goes thought the support level. I will sell the pair. I am going to put a 55 pip profit target and a 30 pip stop.

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Eur/Usd 4Hr Chart

Use this information to help you make good trading decisions.

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Casey Stubbs is the founder of Winners Edge Trading, which is one of the most widely read forex sites on the web. Winners Edge Trading has trained thousands of people to trade the Forex markets.

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