Continuing with our examination of technical and tactical edges for trading FXE, one indicator that consistently produces reliable results is the VIXEN . . a VIX overlay procedure that I have posted on extensively. For those unfamiliar with this cunning beauty, coming soon to the ETF Prophet store is The VIXEN’s Diary, a collection of 50 VIXEN studies and analyses that provides a practical guide for making the VIXEN one of your best trading buddies.
These two charts display the VIX overlay on FXE in daily and 2 minute bars. Depending on your focus . . as either a day trader or swing trader, the VIX is invaluable in assessing potential long/short opportunities. Furthermore, using a fractal approach and reviewing the position of the VIX on the FXE in 2, 10, 60 minute and daily bars can deliver an effective momentum signal. Many platforms provide the means to implement such a fractal setup, either through the use of time tabs or through a programmable dashboard.
On the current daily chart FXE is displaying technical evidence of a rollover in progress. Risk conscious traders would do well, however, to heed the slope of the VIX and wait for a clear change of character to the upside prior to initiating any shorts, IMHO.
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