Hi Traders! Dollar Index short term forecast and technical analysis is here. We do our analysis on the MetaTrader4 platform (MT4). Some very interesting and useful tips and hacks about the MT4 platform could be found here. 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! This analysis will be based on price action trading (if you want to learn about price action trading, you can watch this video here).
On the H4 chart, the price which was moving higher has created a bullish trend pattern in the form of three higher highs, higher lows pattern. While measuring the first and second wave of this bullish trend pattern we have a key resistance zone that has formed based on the 161.8%(93.515) Fibonacci expansion level of the first wave and the 100%(93.302) Fibonacci expansion level of the second wave. The price which was moving higher reached this zone, respected it and is currently moving lower. We also had a bearish divergence that has formed between the first high that has formed at 92.510 and the second high that has formed at 93.455 based on the MACD indicator which we may consider as evidence of bearish pressure. Generally, after a bullish trend pattern we may expect corrections and then potential continuation higher. Currently, it looks like the correction that we are looking for is happening. While measuring this bullish trend pattern using the Fibonacci retracement tool we could see that the price still has room lower towards the key support zone formed by the 38.2%(91.992) – 50%(91.541) Fibonacci retracement zones. We may now move down to lower timeframe and see if we can find evidences supporting this short term bearish view.
On the H1 chart, the price which is moving lower has created a bearish trend pattern in the form of three lower highs, lower lows which we may consider as evidence of bearish pressure. Generally, after a bearish trend pattern, we may expect corrections and then further continuation lower. Currently, it looks like the correction that we are looking for is happening. Also, we have a strong support zone that has formed and the price which is moving lower has broken below this zone and is holding below it, we may consider this as another evidence of bearish pressure. Currently, this strong support zone is acting as a strong resistance zone for us. Until this strong resistance zone holds my short term view remains bearish here and I expect the price to continue lower further after correction.
Dollar Index H4(4 Hours) Chart Analysis
Dollar Index H1(1 Hour) Chart Analysis
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.
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Happy Trading!
Yordan Kuzmanov
Chief Trader at the Traders Academy Club
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