Hi Traders! Dollar Index forecast and technical analysis is here. The way I would like to analyze the chart for setups is based on multi-timeframe confirmations because in my POV if we get more evidences on different timeframes for the same direction then it makes the setup much more reliable. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club Spoiler alert – free memberships are available! Let’s start our analysis from the highest timeframe which will be the weekly chart here.
You can watch the video explanation of this idea here
- 1 Dollar Index W1(Weekly) Chart Analysis – Bearish Momentum, False Break, Bearish Divergence
- 2 Dollar Index D1(Daily) Chart Analysis – Strong Resistance Zone, Bearish Divergence, RSI Indicator, Parabolic Sar
- 3 Dollar Index H4(4 Hours) Chart Analysis – Bearish Divergence, Lower Lows, Two Strong Resistance Zones
- 4 Technical Analysis & Forecast Summary
- 5 Trading Tips
Dollar Index W1(Weekly) Chart Analysis – Bearish Momentum, False Break, Bearish Divergence
On the weekly chart, after the strong bearish move currently it looks like a correction is happening in the form of double wave to the upside and the price has reached a strong resistance zone. Looking at this double wave correction we could see that the price has created a false break with a bearish divergence between the first high that has formed on 28th March 2021 and the second high that has formed at 15th August 2021 based on the MACD indicator which we may consider as evidence of bearish pressure. We may now move down to one timeframe lower and look for evidences supporting this bearish view.
Dollar Index D1(Daily) Chart Analysis – Strong Resistance Zone, Bearish Divergence, RSI Indicator, Parabolic Sar
On the daily chart, the price which is moving higher has currently reached a strong resistance zone, respected it and is bouncing lower from this zone. We also have a bearish divergence that has formed between the first high that has formed on 7th July 2021 and the second high that has formed at 20th August 2021 based on the MACD indicator which we may consider as evidence of bearish pressure. In addition to this, we have an uptrend line breakout based on the RSI indicator which we may consider as yet another evidence of bearish pressure. Also, based on the Parabolic Sar we could see that the dots are above the price which we may consider as yet another evidence of bearish pressure. So everything looks good here for the bears and we may now move down to one more timeframe lower and look for evidences supporting this bearish view.
Dollar Index H4(4 Hours) Chart Analysis – Bearish Divergence, Lower Lows, Two Strong Resistance Zones
On the H4 chart too we have a bearish divergence that has formed between the first high that has formed at 93.167 and the second high that has formed at 93.716 based on the MACD indicator which we may consider as evidence of bearish pressure. Then the price moved lower and broke below the low at 92.439 and has created lower lows based on the moving averages of the MACD indicator which we may consider as a sign of gaining bearish momentum. Until the two strong resistance zones shown in the image below holds my view remains bearish here and I expect the price to move lower further. If the price moves higher further and if we get a valid breakout above the invalidation level shown in the image below then this bearish view will be invalidated.
Technical Analysis & Forecast Summary
Dollar Index W1(Weekly) Chart Analysis
- Bearish Momentum, False Break, Bearish Divergence
Dollar Index D1(Daily) Chart Analysis
- Strong Resistance Zone, Bearish Divergence, RSI Indicator
Dollar Index H4(4 Hours) Chart Analysis
- Bearish Divergence, Lower Lows, Two Strong Resistance Zones
Trading Tips
It is always recommended to look for confirmations before you jump into any trade. If you are not sure about how to trade this sell setup then you can use any setup and strategy that you have in your arsenal to look for bearish moves and join this sell trade.
Also don’t forget to protect your sell trade using a stop loss and make sure to set a target and keep a proper risk/reward ratio.
You will also find a pretty extensive database of educational materials here in the blog – just use the search or check out the Forex Education section above.
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Happy Trading!
Arvinth Akash
Traders Academy Club Team.
