Hi Traders! US Dollar Index forecast update and follow up is here. On July 9th I shared this US Dollar Index Forecast And Technical Analysis post in my blog. In this post, let’s do a recap of this setup and see how it has developed now. 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!
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US Dollar Index H4 (4 Hours) Chart Current Scenario
On the H4 chart after the bearish trend pattern, we had an ABCD correction followed by the most recent uptrend line breakout, and based on this I was expecting the price to continue lower further after pullbacks.
(Note: You can learn about a Killer Forex Strategy “Double Trend Line Principle” here)
On the H4 chart the pullback that I was looking for happened, we have a downtrend line that has formed and the price moved higher and created a false break of this dynamic resistance. We also have a bearish hidden divergence that had formed between the first high that had formed on 8th July 2020 and the second high that had formed on 10th July 2020 based on the histogram of the MACD indicator. As you can see all these facts supported the bearish view and there were no opposite evidences, the price then moved lower further providing an excellent move to the downside.
(Note: You can download the Hidden Divergence e-book here)
You can see this move clearly on the H1 chart below.
We need to understand the fact that the market doesn’t care if we need to buy or sell an instrument the market does what it has to do. As traders we have to hold our horses, we shouldn’t expect our wishes or rumors to happen, we should wait for the facts to happen and when the facts fit in then that’s our opportunity to do any sort of trading. As long as it didn’t happen everything remains as an expectation for us. As you can see in the example above the facts happened as we expected in the form of a false break of dynamic resistance with bearish hidden divergence and the price moved lower exactly as I expected it to. This is why we should always trade based on the facts.
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Happy Trading!
Yordan Kuzmanov
Chief Trader at the Traders Academy Club
