Think Globally, Trade Forex

By Christopher Lewis of TheLFB-Forex.com

NEW YORK (TheLFB-Forex.com) -- If you are a forex trader, you need to stop thinking of yourself as strictly a currency trader and learn to start thinking that you're trading interconnected global markets. You also need to accept the ebbs and flows of technical moves that are based on fundamental global links.

Global markets can offer clues that many of our fellow traders do not pay attention to. For example, commodities are priced in greenbacks in the most liquid of traded markets, and on any given day that produces signals that can be used to control the lot size and expectations attached to a potential forex trade.

The global headline seems to be to get short the dollar and wait for the greenback to unwind itself into oblivion. This is a sign of a possible bubble, or maybe even a reversal. This is not a call for a reversal of the main trend, but a pullback to resistance would not be out of the question if we consider the signals coming from inter-related markets. There are signs, in a lot of places -- and not all of them are currency-pair related -- that a dollar bounce may be inevitable.

The December corn futures contract, (ZC DEC09) -- long corn equates to a short dollar -- is up against resistance at the 4.00 handle, which also coincides with the 23% Fibonacci level from the entire move higher; certainly resistance here makes sense.

The daily bar is closing in a "shooting star" or "pinocchio bar" formation and is price action that is happening at a major resistance point. There certainly is a technical case for possible weakness in the corn markets.