Hi Traders! Dollar Index short term 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 daily chart here.
You can watch the video explanation of this idea here
- 1 Dollar Index D1(Daily) Chart Analysis – Strong Resistance Zone, Bearish Divergence, Stochastic Oscillator
- 2 Dollar Index H4(4 Hours) Chart Analysis – Range, Bearish Divergence, Volumes Indicator
- 3 Dollar Index H1(1 Hour) Chart Analysis – Multiple False Breaks, Bearish Divergence, Volumes Indicator
- 4 Technical Analysis & Forecast Summary
- 5 Trading Tips
Dollar Index D1(Daily) Chart Analysis – Strong Resistance Zone, Bearish Divergence, Stochastic Oscillator
On the daily chart, the price which is moving higher has currently reached a strong resistance zone. We also have a potential bearish divergence that is forming between the first high that has formed at 92.381 and the second high that has formed at 93.174 based on the MACD indicator which we may consider as evidence of bearish pressure. Also, based on the Stochastic Oscillator we could see that the price has reached its extreme which we may consider as yet another evidence of bearish pressure. We may now move down to one timeframe lower and look for evidences supporting this bearish view.
Dollar Index H4(4 Hours) Chart Analysis – Range, Bearish Divergence, Volumes Indicator
On the H4 chart, the price is currently moving inside a range. This range is formed by the highs and lows reaching parallel support and resistance zones. The price which is moving inside this range has currently reached the top of it. In addition to this, we have a bearish divergence that has formed between the first high that has formed at 92.810 and the second high that has formed at 93.174 based on the MACD indicator which we may consider as evidence of bearish pressure. Also, based on the Volumes indicator we could see that the volumes are dropping, we may consider this as another evidence of bearish pressure. So the bottom line here is that the H4 chart has evidences supporting the bearish view.
Dollar Index H1(1 Hour) Chart Analysis – Multiple False Breaks, Bearish Divergence, Volumes Indicator
Looking at the H1 chart, we could see that the price which is moving higher has created multiple false breaks with bearish divergence between the first high that has formed at 93.027 and the second high that has formed at 93.174 based on the MACD indicator which we may consider as evidence of bearish pressure. In addition to this, based on the Volumes indicator we could see that the volumes are dropping here as well, we may consider this as yet another evidence of bearish pressure. So everything looks good here for the bears, if the price moves lower and if we get a valid breakout below the low at 92.932 we may then consider it as a validation for the bearish view and may expect the price to move lower further in the short term.
Technical Analysis & Forecast Summary
Dollar Index D1(Daily) Chart Analysis
- Strong Resistance Zone, Bearish Divergence, Stochastic Oscillator
Dollar Index H4(4 Hours) Chart Analysis
- Range, Bearish Divergence, Volumes Indicator
Dollar Index H1(1 Hour) Chart Analysis
- Multiple False Breaks, Bearish Divergence, Volumes Indicator
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 short term 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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If you have any further questions, don’t hesitate to drop a comment below!
Happy Trading!
Yordan Kuzmanov
Chief Trader at the Traders Academy Club
