August is often a slow trading month-lots of vacations and summer doldrums, and kids back to school and college. Markets tend to start moving as we move into September-a new quarter starts, traders come back from vacation. This Friday we will get the August employment report on Friday morning, this might be the kickoff to a higher volatility trading environment.
This phenomenon is evident in the Dollar Index chart below. The trading range has tightened, the trend has turned sideways, and the oscillator indicators have turned neutral. This contraction shows in the triangle formed on the chart, as it makes higher lows and lower highs
Looking ahead, I’ll be watching for a breakout of this triangle for the start of a new trend for the Dollar, potentially setting the direction for the Dollar and currencies for the start of Q3.
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Watch for a breakout of the triangle.
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